Just this past week we helped a new client enroll in Medicare D for the first time. Unbeknownst to them, they were about to encounter two big penalties – Delayed Enrollment & Income Related Monthly Adjustment Amount (IRMAA).
“Sally” is a 73 year old widow in excellent health. Due to a combination of factors including with her solid financial status and not wanting to face the morass of Medicare enrollment, she had neglected to enroll during her initial enrollment period which was eight years ago.
When we sat down to calculate the monthly penalty she would incur, she was shocked to learn the magnitude of the penalty she faced and that it would affect her premiums for the full duration of her enrollment. Anyone who delays or suspends enrollment in their Medicare product for more than 63 days is subject to this stinger.
To calculate a Delayed Enrollment Penalty, Medicare calculates the penalty by applying 1% of the National Premium Average times the number of full, uncovered months you didn't have Part D or creditable coverage.
For Sally, this meant, 99 months (Oct 2018 minus June 2010 = 99 months) without coverage and a whopping $34.70 added to her monthly bill. Considering that her regular premium is $27.40 for her selected Medicare D product, this was a shocker.
To add to the dilemma, because her Modified Adjusted Gross Income (MAGI) is in excess of $125,000 this year, Sally classifies as a “High Earning Senior” . Based on this, she is also subject to "The Medicare Income Related Monthly Adjustment Amount" which is going to tack on an additional $31.90 per month to her premium.
Beneficiaries who file individual tax returns with income that is:Beneficiaries who file joint tax returns with income that is:Medicare Part D Income Related Monthly Adjustment Amount
In one hour, Sally learned that her monthly out of pocket cost, before seeing any benefits, is now $94.00 which is a dramatic increase from the $27.40 premium for her selected Medicare D product.
Is there any relief for Sally? Perhaps, filing an appeal on both of these penalties will be worth the trouble. Senior Checks and Balances can help her complete is a Request for Reconsideration as well as a Late Enrollment (LEP) Reconsideration Form.