Question: I signed up for Medicare, and evaluated my options and signed up for additional insurance, but now I received paperwork telling me I have a Late Enrollment Penalty and have to pay more money for my premiums? What should I do? Do I have to pay this?

Answer: The steps for getting onto Medicare are different for everyone, and the timeline to join can be different too. Every individual has a different set of variables they bring to the table when discussing Medicare and when to join.

Most individuals become eligible for Medicare when they turn 65. If you are working and carry insurance from an employer group of more than 20 employees, you CAN stay on your employer health insurance and decline Medicare without any penalties or issues. Then when you are preparing to retire and drop the employer coverage, you’ll have a Special Enrollment Period (SEP) to sign up for Medicare. The process for signing up for Medicare after a delay like this has some unique steps, but you are allowed to use that SEP created upon leaving employer coverage to join Medicare AND pick any additional coverage.

Once you join Medicare and add your additional plan of choice, your new insurance company will usually send paperwork to complete. This paperwork will ask why you are enrolling at this time (instead of earlier when you turned 65) and what your coverage was before.

When have deferred Medicare, while on employer coverage, you should the process to get Medicare requires you complete two forms: the 40B, which is your written request to get Medicare Part B, and the L564, which your employer completes to indicate that you did in fact have coverage through active employment and therefore qualify for the SEP to get your Medicare Part B started. You probably disclosed that information on the application for your insurance when you completed it, but the insurance company requires further clarification of this information.

The 40B and L564 document your employer coverage for the purposes of Medicare Parts A & B. That is why your Medicare Part B is the normal $185 per month premium.

If you didn’t complete and submit these forms, or based on these forms it looks like you had a gap in coverage, your new insurance company may assume you were without coverage, and therefore you might incur a Late Enrollment Penalty (LEP). This LEP will increase the cost of your coverage.

However, in your particular situation, there is another kind of LEP that applies, and it is based on your Prescription Drug Coverage. THAT information was NOT included in either the 40B or the L564 form.

Prescription Drug coverage has a different standard entirely, called the Creditable Coverage standard. This standard asks if the Prescription Drug Coverage portion of your employer insurance meets the minimum standard that Medicare Part D requires. You’ll know if you met this standard based on a document given to all employees in group coverage every year, stating that the Prescription Drug Coverage portion of their insurance meets the minimum standard (or not), called the Creditable Coverage Letter. It is an actual letter that is created by your insurance carrier and employer. It’s usually two pages long and begins with “Important Notice from (Employer’s Name) About Your Prescription Drug Coverage and Medicare.” Most individuals are NOT familiar with this and don’t remember ever receiving it in the mail or from their employer.

When your new insurance company tells you that you incurred an LEP, you can certainly work with the insurance company to eliminate the LEP, as long as you can provide proof that you had coverage from your employer plan and that is was deemed Creditable Coverage. Start by trying to find old Creditable Coverage Letters. If you don’t have one, then you can go back to your employer and ask for copies of the letter for the years that you were Medicare-eligible. Once you have those copies of the letter, you must present one for each year to your new insurance carrier. If you resolve the confusion about your prescription drug coverage, you will see your LEP removed and the premium reduced to the usual amount.

More and more we see individuals working beyond 65 years of age with employer health benefits and therefore choosing to defer Medicare enrollment. We also see situations where one spouse turns 65 and the other spouse is still working and carries the insurance for them both, and they can also choose to defer Medicare. These are the situations where all of these factors I’ve discussed like Creditable Coverage and SEPs come into play.

It is important to understand the options available and rules that apply to you when eligible for Medicare at age 65. It is worth talking to professional Medicare experts to be sure you are making the correct enrollment decisions. You need to have accurate and useful information for your individual situation to be sure you are making the correct Medicare choices.

Janell Sluga is a Geriatric Care Manager helping seniors in our community access services and insurance. To reach her, please email editorial@post-journal.com.