Creditable Coverage

Prescription drug coverage that is at least as good as the standard Medicare Part D coverage, which helps avoid the late enrollment penalty — Creditable coverage, in the Part D context, is prescription drug coverage that is actuarially determined to be at least as good as the standard Medicare Part D coverage. A beneficiary who maintains creditable drug coverage through an employer plan or other source does not incur the Part D late enrollment penalty when they later enroll. The agent should advise clients to keep evidence of creditable coverage, since the determination is what shields them from the 1%-per-month lifetime penalty. Employer plans must provide an annual creditable coverage notice so the beneficiary has written proof; without it, the agent should caution the client that a late enrollment penalty may apply when Part D is eventually chosen.

National insurance concept

10% of the monthly premium for each full 12-month period of delay, applied to twice the number of years delayed, a 40% surcharge here — The Part A late enrollment penalty is 10% of the monthly premium for each 12-month period the person was eligible but not enrolled, applied to twice the number of years of delay. For a 2-year delay, that is 10% multiplied by (2 x 2 years), producing a 40% premium surcharge. This harsh penalty encourages timely enrollment. It is distinct from the Part B penalty, which adds 10% for every 12 months of delay.

National insurance concept