Medicare Enrollment Pitfalls: Part B, Part D and Creditable Coverage

MEDICARE ENROLLMENT PITFALLS

The expensive mistakes usually happen before the plan comparison.

Part B and Part D have different late-enrollment rules. Employer medical coverage and prescription drug coverage are also evaluated differently. Confirm the rule that applies before delaying enrollment or changing existing coverage.

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Pitfall 1: assuming any health coverage lets you delay Part B

The Part B Special Enrollment Period generally relates to group health coverage based on your or your spouse’s current employment. COBRA, retiree coverage, Marketplace coverage, and some other coverage do not extend that employment-based Part B window. Medicare states that the eight-month Part B Special Enrollment Period begins when employment or the group health coverage ends, whichever happens first; choosing COBRA does not restart it.

Potential Part B penalty

If you do not qualify for a Special Enrollment Period, the Part B late-enrollment penalty is generally an additional 10% for each full 12-month period you could have had Part B but did not. The penalty is generally added for as long as you have Part B. A late enrollment can also create a coverage gap.

Pitfall 2: confusing medical coverage with creditable drug coverage

An employer health plan may allow a person to delay Part B while its prescription benefit is not creditable for Part D—or the reverse may require separate analysis. Ask the employer or plan administrator for the annual written creditable-coverage notice and keep it.

Potential Part D penalty

After becoming eligible for Medicare, going 63 consecutive days or more without Part D or other creditable prescription drug coverage may trigger a late-enrollment penalty. Medicare calculates it using 1% of the national base beneficiary premium for each full uncovered month. The base amount can change annually, and the penalty is generally paid for as long as you have Medicare drug coverage.

Pitfall 3: discarding proof of prior drug coverage

Keep creditable-coverage notices, termination letters, benefit summaries, and enrollment records. A new Medicare drug plan may ask you to confirm prior creditable coverage. Missing the response deadline can cause the plan to assess a penalty until the record is corrected through the applicable review process.

Pitfall 4: enrolling in Part D without checking other coverage

Joining Medicare drug coverage can affect employer, union, VA, TRICARE, or other benefits. In some arrangements, enrolling in Part D may cause you or family members to lose other health or drug coverage. Review the plan materials and speak with the benefits administrator before changing coverage.

Pitfall 5: waiting too long to consider Medigap

Your Medigap Open Enrollment Period generally lasts six months beginning when you are 65 or older and enrolled in Part B. During that period, you can generally buy any Medigap policy sold in your state regardless of health. Outside that period, medical underwriting may apply unless you have a guaranteed-issue right or another state-specific protection.

A practical document checklist

• Medicare eligibility and effective-date notices
• Employer confirmation showing coverage was based on current employment
• CMS-L564 or other employment-coverage documentation when applicable
• Annual Part D creditable-coverage notices
• COBRA, retiree, VA, TRICARE, union, or Marketplace plan materials
• Prescription list and preferred pharmacies
• Any notice requesting proof of prior creditable drug coverage

Review Medicare’s late-enrollment penalty guidance and creditable drug coverage guidance.