07/31/2007   Medicare Part D Late Enrollment Penalty letters to members

Beginning Aug. 1, we will mail letters to our Medicare Part D members to let them know the Centers for Medicare & Medicaid Services (CMS) Late Enrollment Penalty (LEP) may affect their premiums.

CMS charges the LEP to Medicare Part D members who didn’t enroll in or maintain enrollment in a Part D plan or other creditable coverage when they were first eligible to do so. Creditable coverage is coverage that is considered to be as good as Medicare.

CMS regulations state that "Medicare beneficiaries may incur a late enrollment penalty (LEP) if there is a continuous period of 63 days or more at any time after the end of the individual’s Part D initial enrollment period during which the individual was eligible to enroll, but was not enrolled in a Medicare Part D plan and was not covered under any creditable prescription drug coverage."

There is a 1% penalty for each month the member did not have creditable coverage. The penalty is not based on the premium the member pays to the plan. Instead, it is based on the Part D base beneficiary premium amount, which is determined by CMS. The plan collects the LEP but gives all the funds to CMS.

Anyone who had a low-income subsidy in 2006 and/or 2007 will not have to pay the LEP for the year in which they had the subsidy.

Members will be affected differently by the LEP, so we are sending several versions of these letters as follows:

• Return of proof of creditable coverage to members who chose not to enroll in MedAdvantage + Rx, with a reminder about keeping creditable coverage in the meantime and how this impacts the LEP.
• Request for proof of creditable coverage from members who are currently enrolled in our Part D plan.
• Reminder that we did not receive the member’s proof of creditable coverage by the requested deadline and that we sent their information to Medicare accordingly. Members may appeal to Medicare if they believe they do have creditable coverage.
• Notification that Medicare has decided the member does not have creditable coverage and, therefore, must pay the LEP (no further appeal allowed).
• Notification of change in premium due to LEP (appeal to Medicare allowed).
• Notification that the member is no longer being charged the LEP because they had creditable coverage during their initial enrollment period.

We have prepared a helpful FAQ about the LEP to assist you in answering your clients’ questions. Also, as always, if you have any questions, please talk to your Regence Consumer Sales contact.

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