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Additional Costs of the Premium Penalty
Although, there are still a few open questions surrounding the monthly premium penalty (for instance, whether the government eliminate the penalty), let us focus on two factors that (based on the annual Open Enrollment period information) could be theoretically effected by late enrollment:
1. The total Amount of the Medicare Part D Premium Penalty
2. When Your Medicare Part D Coverage Begins - if you finally decide to join a Medicare Part D plan
For purposes of explanation, let us use an example / fictitious Medicare Part D beneficiary: "Thomas" who is newly eligible for the Medicare Part D plans (his seven month window is November 2007 through May 2008) and does not have any other creditable prescription drug coverage.
- The Amount of the Premium Penalty. It appears that if our Medicare beneficiary Thomas (who does not fall within one of several special classes of exceptions defined by CMS) waits until after the close of his initial Open Enrollment deadline (May of 2008), he may be subject to a minimum of a 6% premium penalty because the next annual Open Enrollment period (or Annual Coordinated Election Period) does not begin until November 15, 2008 and runs until December 31, 2008.
- When Your Medicare Part D Coverage Begins. In addition to the increased premium penalty, it is possible that if Thomas waits until after May 2008, not only will he be subject to several months of the 1% monthly premium penalty, but Thomas also will not receive any Medicare Part D coverage before January 1, 2009. In other words, after his May 2008 deadline, Thomas cannot enroll in a Medicare Part D program until the next Open Enrollment begins again on November 15 and coverage first starts in January of the next year.
Last updated on: 07/18/2008
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