Reporting From the Front Lines - 2015 ACA Open Enrollment

By the Numbers - Open Enrollment for 2015 Affordable Care Act (ACA) Health Insurance

Earlier today, I joined on the conference call with U.S. Department of Health and Human Services (HHS) Secretary Sylvia Burwell.   After graciously thanking the audience for contributing to the success of this year's Open Enrollment Period, Ms. Burwell provided the following ACA and Health Insurance Marketplace updates:

* 11.4 Million Americans selected or were auto-enrolled into a 2015 ACA plan

* Of the 11.4 Million, 8.6 Million enrolled through the Federal Marketplace and 2.8 Million through State-based Exchanges

* Florida came in first-place for Federal Marketplace enrollments, with 1.6 Million Americans enrolling in a 2015 plan so far

The figures above reflect all consumers completing an application and selecting a health plan, without regard to whether the premium was paid.  Ms. Burwell stated that the federal government's goal for 2015 open enrollment had been 9.1 Million actually paying the plan premium, and it appears that the 2015 goal is likely to be met or exceeded.

Ms. Burwell noted on the call that the 10 Million drop in uninsured Americans from 2013 to 2014 is the largest drop in the uninsured since the 1970s.

Below are additional numbers released on February 11th by HHS:

There has been an increase in coverage choices:

25%              The increase in issuers competing for business in the 2015 Marketplace as compared to last year.

40                 The average number of plans consumers can choose from this year.

It has become easier to navigate the web site or seek help in another language:

76 to 16       The reduction in the number of screens on HealthCare.gov that typical consumers need to click through when completing an application online this year as compared to last year.

200+              Languages in which consumer assistance is provided at the Marketplace Call Center.

60%               Percentage of consumers who visited CuidadodeSalud.gov through a mobile device or tablet.

Help for folks to sign up without the need for their own Internet, cell phone or tablet:

23,000+        Certified application counselors, navigators and in-person assisters on the ground in communities across the nation working to educate and enroll individuals in Marketplace coverage.

74,000+       Agents and brokers on the ground in communities across the nation working to educate and enroll individuals in Marketplace coverage.

Another government date soon approaching is the 2014 Federal Income Tax payment deadline.  Many folks may be interested to know about these just released income tax related numbers:

$268             The average monthly tax credit for people who qualify for financial assistance in the 37 states using Healthcare.gov through January 30.

87%              The percentage of Marketplace consumers who qualified for tax credits to make their monthly premiums more affordable in the first two months of open enrollment.

Until next time,

Andrew Herman

Certified Agent on the Marketplace

Do I Have to Pay an ACA Tax Penalty for 2014?

Were you covered under Affordable Care Act (ACA) or Grandfathered Health Insurance during 2014?  If not, you may have to make an individual shared responsibility payment (SRP) on your 2014 federal tax return.

The annual penalty for not having health insurance in 2014 is $95 or 1% of your 2014 income, whichever is greater.  This amount is for each person - if you have a family, you must pay this amount for you, for your spouse, and for each child ($47.50 per child under 18), up to the maximum annual penalty shown in the chart below. The penalty amount increases in future years:

From Kaiser Health News

The penalty amount each year is capped at the national average premium for a Bronze-level plan.  For 2014, the annual national average premium is $2,448 per individual ($204/month per individual) or $12,240 for a family of five or more members ($1,020/month).

If you are uninsured for a portion of a year, 1/12 of the yearly penalty applies to each month that you are uninsured.  If you are uninsured for less than three months of the year, you do not have to make an SRP.

How does the federal government count income for purposes of calculating the SRP?

- Start with all gross income reported on your 2014 return that is not exempt from tax

- Include any income from the sale of your main home in 2014

- Include only the taxable part of any social security benefits

- Include any gains (but not losses) from Form 8949 or Schedules C, D or F

- Then subtract the filing threshold amount (see table below for your filing status)

 

For example, a single person under age 65 with 2014 taxable income of $100,000 would subtract $10,150 to arrive at an adjusted income amount of $89,850.  Without any health insurance in place during 2014, that person must pay an SRP of $898.50 (this amount equals the greater of $95 or $89,850 x 1%).

Click here for a handy ACA Tax Penalty Calculator

Who qualifies for an exemption from the SRP?

If you did not have minimum essential coverage in 2014 required by ACA, review the following list to see if you can qualify for an exemption from the SRP:

• You’re uninsured for only 1 or 2 consecutive months of the year
• You enrolled in a health plan that started no later than May 1, 2014, but were uninsured any number of months before that in 2014
• The lowest-priced coverage available to you, through either an individual or job-based plan, would cost more than 8% of your household income
• You don’t have to file a tax return because your income is below the level that requires you to
• You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
• You’re a member of a recognized health care sharing ministry
• You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
• You’re incarcerated (serving a term in prison or jail), and not being held pending disposition of charges
• You’re not lawfully present in the U.S.
• You’re a U.S. citizen living abroad, or one of certain types of non-citizens
• You qualify for a hardship exemption.

To learn more about how to apply for any of the exemptions shown above, visit the official government website at the following link:

https://www.healthcare.gov/fees-exemptions/exemptions-from-the-fee/

Until next time,

Andrew Herman

ObamaCare By The Numbers

Obamacare: What Are the Numbers?

One year into the implementation of many of the Affordable Care Act’s key features- including Medicaid expansion and the opening of the health insurance exchanges, numbers are coming in regarding new insurance enrollments in the past year. The numbers are based off of two surveys reported in September, 2014: the Centers for Disease Control National Health Interview Survey and the Census Bureau’s Current Population Survey. The Current Population Survey only gave the estimated percentage of uninsured people in 2013 (13.4% or 42 million Americans). On the other hand, The National Health Interview Survey gave the estimated number of uninsured people for both 2013 and 2014 and compared the two figures. A preliminary report with figures from January to March 2014 estimates that in 2014 there are 3.8 million fewer uninsured people than in 2013.

However, more concrete numbers were provided by the Heritage Foundation on October 22. The Heritage Foundation found that insurance enrollment in individual market plans increased by 6,254,564 individuals and that Medicaid enrollment increased by 6,072,651 individuals. This seemingly large increase in insurance coverage is marked, but still not up to the government’s predictions for 2014. The increase in insurance coverage, however, is not as great as first glance indicates. Although there was an increased enrollment in individual market plans of over six million individuals (both on and off exchanges), there was simultaneously a decline of 3,788,978 individuals enrolled in employer-sponsored group plans. Hence the net individual market plan enrollment is only 2,465,586 individuals.

1- The changing number of uninsured in 2014

It is interesting to note that there was an enormous increase in the number of new Medicaid enrollments. 26 states and Washington, D.C. have chosen to implement expanded Medicaid programs in 2014. Of over six million new Medicaid enrollments in 2014, 94% occurred in states that implemented Medicaid expansion. It will be interesting to see if this trend continues. In 2015, Pennsylvania will implement expanded Medicaid, opening it up to those making up to 138% of the Federal Poverty Level. Perhaps in future years, more states will join the bandwagon and expand their Medicaid programs and begin to reduce inequality.

For reduction of inequality is what the Affordable Care Act is- theoretically- all about. The enrollment patterns in 2014 are reflective of that goal. The Medicaid expansion in 26 states and Washington, D.C. has evidently allowed many insurance who could not afford private insurance plans. Many of the new enrollments are of people who are traditionally underprivileged- those living in rural areas; young people (defined as 18-34); and certain racial groups, such as black and Hispanic individuals; and women.

2- Uninsured rates in 2014 by County

Moving forward, it will be interesting to see whether the number of uninsured will continue to decline, and whether more states will expand Medicaid. As the Open Enrollment Period for individual market plans will begin on November 15, there is concern about technological issues such as occurred last year. There is also concern that people may not enroll for health insurance due to higher premiums. In light of 2014’s only moderate success in increased enrollment and the deterrents from obtaining health insurance, the Department of Health and Human Services (HHS) has modified its 2015 predictions. Abandoning the 13 million figure, the HHS now predicts that 9-9.9 million will newly obtain health insurance in 2015.

Until next time,

Andrew Herman

AH Insurance Services, Inc.

2015 ObamaCare Open Enrollment is Here - What Are the Enrollment Deadlines?

The Open Enrollment period for 2015 individual health plans runs from November 15, 2014 to February 15, 2015.

If you have not enrolled in 2015 coverage by February 15, you generally cannot buy Marketplace health coverage for 2015 unless you qualify for a Special Enrollment Period.

If you are enrolled in a 2014 Marketplace plan, your coverage ends December 31, 2014. This is true no matter when your 2014 coverage began.

To continue health coverage in 2015, you can renew your current health plan or choose a new plan through the Marketplace until February 15, 2015.

To learn more, click here to contact us or visit the federal healthcare.gov site.

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

2015 Medicare Annual Election Period is Here; 2015 Medicare Part B Premiums and Deductibles Remain Unchanged from 2014

Today marks the beginning of the Annual Election Period (AEP) for Medicare Health & Drug Plans.  This is the period during which Medicare beneficiaries may change their Medicare Advantage (Part C) plan or Medicare Part D Prescription Drug Plan.  Medicare beneficiaries also may use the Annual Election Period to dis-enroll from the Medicare Advantage program and return to Original Medicare.

The Medicare AEP runs from October 15 - December 7.  Medicare plans selected as part of AEP become effective on January 1, 2015 and are guaranteed for the duration of 2015 (subject to timely payment of plan premiums).  For more information, click here to be directed to CMS.gov.

Last week, the U.S. Department of Health & Human Services announced that the Medicare Part B premiums and deductibles for 2015 will remain the same as the last two years!  In addition, 2015 premiums, copays and deductibles for other Medicare programs were announced.  The Centers for Medicare & Medicaid Services (CMS) released a bulletin that can be read in its entirety by clicking on this link.

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

Supreme Court Issues Narrow Ruling on Hobby Lobby Stores Case

The U.S. Supreme Court ruled 5-4 today -- in Burwell v. Hobby Lobby Stores Inc. (Case number 13-354) -- that closely held corporations do have religious rights, and should be able to avoid complying with the U.S. Department of Health and Human Services (HHS) birth control mandate regulations.

The ruling appears to be narrow in scope, however, as Justice Samuel Alito wrote in an opinion for the majority that the opinion applies only to closely held corporations, and only to the birth control mandate provisions in the regulations that HHS wrote to implement basic preventive services benefits section of the Patient Protection and Affordable Care Act (PPACA).

Justice Alito wrote for the majority that a closely held corporation does have rights under the federal Religious Freedom Restoration Act of 1993 (RFRA).

RFRA prohibits the government from substantially interfering with a "person's exercise of religion, even if the burden results from a rule of general applicability," unless the government shows that applying the burden furthers a "compelling government interest" and is the "least restrictive means of furthering that compelling government interest."

The family that owns Hobby Lobby Stores and Hobby Lobby's sister company, Mardel Inc., and the family that owns Conestoga Wood Specialties Corp., wanted HHS and the courts to respect their ability to get protection from RFRA.  The Hobby Lobby case majority agreed that closely held corporations have RFRA rights, but avoided saying that the ruling applies to other types of corporations.

Alito noted that Hobby Lobby and three similar companies affected by the ruling are not publicly traded and are each owned and controlled by members of a single family.  Additionally, he said that the majority has not written a ruling that will apply to HHS vaccination mandates, blood transfusion mandates, or other mandates other than the birth control mandate.

"HHS points to no evidence that insurance plans in existence prior to the enactment of [PPACA] excluded coverage for such items," Alito wrote.  "Nor has HHS provided evidence that any significant number of employers sought exemption, on religious grounds, from any of [PPACA's] coverage requirements other than the contraceptive mandate."

Critics of the idea that RFRA can apply to companies -- including two dissenting Supreme Court justices: Ruth Bader Ginsburg and Sonia Sotomayor -- argued that RFRA provides religious rights only for individual people, not for companies.

Two other justices Stephen Breyer and Elena Kegan -- said the Hobby Lobby case plaintiffs' challenge to the HHS birth control mandate fails on its merits, but they said they did not need to decide whether for-profit corporations or the owners of for-profit corporations can bring RFRA claims.

In a concurring opinion supporting the majority decision, Justice Anthony Kennedy wrote that the Hobby Lobby opinion is not as sweeping as Ginsburg and Sotomayor fear.  According to Kennedy, HHS at least had an obligation to show that the mandate was the least restrictive means for achieving the goal of providing low cost access to contraceptives - and it did not do that.

The government already lets nonprofit employers avoid paying directly for contraceptive benefits, and that shows there is a less restrictive approach HHS could have used to accommodate the needs of closely held for-profit employers with objections to the birth control mandate, Kennedy wrote.

Not surprisingly, Democrats disagree with today's ruling and do not appear to see any political downside to taking on the decision.  The Democratic Senatorial Campaign Committee sent out an email shortly after the ruling in a fundraising effort, and several vulnerable red-state Democrats up for reelection were quick to criticize the decision.

"It is shameful that a woman’s access to contraception is even up for debate in the year 2014,” Sen. Kay Hagan (D-N.C.) said today.  “The choice about whether to use birth control should be between a woman and her doctor, not her boss, and no employer should be allowed to interfere with a woman’s access to contraception." 

Republicans applauded the decision.  "The Obama administration cannot trample on the religious freedoms that Americans hold dear,” Senate Minority Leader Mitch McConnell said in a statement.

The Kentucky Republican also took the opportunity to deride ObamaCare as “the single worst piece of legislation to pass in the last 50 years.”

House Speaker John Boehner (R-Ohio) said the decision is “another defeat for an administration that has repeatedly crossed constitutional lines in pursuit of its big government objectives.”

Sen. Ted Cruz (R-Texas), a potential 2016 GOP presidential nominee, said the decision is “a repudiation of the Obama administration’s untenable position that people with sincerely held religious beliefs should be forced to comply with an unconstitutional mandate while a parade of waivers, exemptions, and delays are granted for purely commercial and political interests.”

Editor's Note:  Generally this blog does not take sides in political issues, but I offer the following remarks for readers to consider:

1) It is disheartening to me that both political sides continue to demonize each other and further the dysfunction in Washington, D.C.  Political wedge issues such as abortion and contraceptives serve as provocation to distract the citizenry from common agendas that both sides support and carry out effectively.  It seems inappropriate to me that politicians on both sides make inflammatory statements designed to incite and divide.

2) Senator Hagan misleads her followers when she remarks that "It is shameful that a woman’s access to contraception is even up for debate in the year 2014."  Most reasonable people hearing that comment would assume that Hobby Lobby Stores did not want its employees having access to any contraceptives; yet further inspection reveals that Hobby Lobby objected to only a handful of contraceptives available - those that work to abort an already conceived embryo (not contraceptives used to prevent conception).  Hobby Lobby's health plan covers 80% of available contraceptives under the PPACA, but Senator Hagan would not want to be bothered by that detail with such a great opportunity to grandstand.

Until next time,

Andrew Herman, President

2014 Choosing a Medigap Policy Guide

The official 2014 Guide to Health Insurance for People with Medicare was published earlier this year by the Centers for Medicare and Medicaid Services (CMS).  This updated guide covers important topics such as:

• What is a Medigap policy
• What Medigap policies cover
• Your rights to buy a Medigap policy
• How to buy a Medigap policy

A Medigap policy is also known as 'Medicare Supplement'.  It is a private health insurance policy that supplements the Original Medicare Program (Parts A and B) by covering out-of-pocket costs not paid for by Medicare (such as co-payments, coinsurance and deductibles).

Medigap, or Medicare Supplement, policies are sold by their plan letter name such as "Plan F" or "Plan N".  Consumers purchasing Medigap typically also buy a Stand-alone Medicare Part D Prescription Drug Plan (PDP) since today's Medigap policies are not designed to cover prescription medicines.

Medigap coverage is not the same as the Medicare Advantage program (Part C of Medicare).  When you enroll into a Medicare Advantage plan, all of your Medicare benefits are delivered by a private insurance company.  Medicare Advantage plans most often are HMOs or PPOs, and they include medical and prescription drug coverage under one roof.  As well as the convenience factor, Medicare Advantage HMOs and PPOs typically have additional benefits and features that are not included with Original Medicare.  The primary downsides of having Medicare Advantage are: 1) the insurance company might have a limited provider network; and 2) you may need to contend with pre-authorization requirements not imposed by Original Medicare and Medicare Supplements.

Contact us if you are unsure which type of coverage is most suitable for you.

Click Here To Download the 2014 Choosing a Medigap Policy Guide

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

Health Insurance Marketplace - Most Existing Customers Can Auto-Enroll into 2015 Plan

The Centers for Medicare and Medicaid Services (CMS) proposed a rule last week that will allow Health Insurance Marketplace customers enrolled in a 2014 plan to auto-enroll into a 2015 plan. Such an auto-enrollment process will make it easier for satisfied consumers to remain on their health plans.

“As we plan for open enrollment in year two and continue to build a sustainable long-term system, we are committed to simplifying the experience for consumers by allowing auto-enrollment,” said Sylvia Burwell, Secretary of the Department of Health and Human Services (HHS). “We are working to streamline the process for consumers wishing to remain in their current plan.”

HHS noted that nine out of 10 employees covered by the Federal Employment Health Benefits Program typically do not change plans from year to year, and are auto-enrolled into their current plans with updated premiums and benefits. Of course, the Federal program has been in existence for more than fifty years and is much more mature compared to the fledgling federal and state exchanges.

HHS says people who got their health insurance through HealthCare.gov in 2014 will get notices telling them to update their application information with income changes to update their tax credit eligibility.

“Consumers will receive information from their health insurance company about the premium and the amount they are eligible to save on their monthly bill close to the beginning of the open enrollment period, when they will be able to take action should they choose to do so,” it added.

Under the method proposed by federal health officials, the government will renew people in their current health plans as long as their incomes and covered family members are not changing, and as long as their plan will be offered through the federal marketplace for the 2015 plan year.

As long as you gave permission for each year's tax records to be checked by the government when you first applied for exchange coverage, the government will continue your premium subsidy arrangement into next year. Federal officials said that about 100,000 applicants did not provide such permission during the initial sign-up period; these consumers will need to reapply in 2015 or otherwise their plan will be renewed without any premium subsidy. If you are not sure if you gave the requisite permission, call the Marketplace on 1-800-318-2596.

Continuing people's current subsidies makes sense since Marketplace consumers already must report through Healthcare.gov any changes in their income within a month of the change, so that the premium subsidy calculation should be up-to-date.

Under the proposed rules, if a 2014 plan is no longer offered for 2015 those consumers would automatically be assigned to the most similar plan offered by the same insurer; or if that insurer is no longer offering any coverage the consumer would be enrolled in the most similar plan available from a different insurer in the consumer's service area.

It might make sense to shop coverage for 2015, in particular if the federal government auto-assigns a plan from a different company. Open enrollment for the 2015 plan year is scheduled to begin on November 15.

Always feel free to call us at AH Insurance Services, Inc. or send an email if you have any questions about your health plan.

Until next time,

Andrew Herman, President

The Continuity of Delay- Updates in Obamacare

In the past month, the federal government has further delayed implementation of certain parts of the Patient Protection and Affordable Care Act (PPACA), more commonly referred to as Obamacare. The delays in implementation regard three main topics- non-grandfathered individual health insurance, the health insurance mandates regarding businesses, and the implementation of insurance bought through health insurance exchanges (HIXs).

The provisions of the PPACA require all individual health care plans to include the ten essential health benefits. Initially, this requirement was to take effect on January 1, 2014. However, on November 14, 2013, President Obama said that states could decide whether to allow individuals to renew non-compliant plans through 2014. Hence, implementation of the provisions requiring plans to include the essential health benefits was delayed for a year. Yet more recently, on March 5, 2014, this implementation was delayed by a further two years. States can now choose to let individuals buy insurance policies that do not provide Obamacare’s benefit standards through October 2016 and to let individuals keep such policies through a year after that (through September 2017). About half of the states have decided to adopt these delays; an estimated 500,000 people have decided to renew their pre-Obamacare policies into 2014.

Similar delays have been made regarding businesses. The initial draft of the PPACA mandated that starting January 1, 2014, businesses with more than 50 full time equivalent workers (medium sized businesses) must offer insurance to full-time employees. As of February 10, 2014, this mandate was postponed until January 1, 2016. Although the employer mandate is taking effect for large businesses (100 or more full time equivalent employees) only one year late (January 1, 2015), it is being implemented in a more staged manner than was initially planned. Large businesses must, in 2015, only offer insurance to 70% of full time employees, and must then provide insurance to 95% of full time employees from 2016 on.

Some argue that these recent decisions to push back effective dates for the employer mandate and the individual health insurance mandate are purely political moves. Everyone from Congressmen to ordinary citizens have argued that the decision to delay the full effects of Obamacare until after the mid-term elections is a plot to maintain Democratic political control and to simultaneously hide the inability of politicians to actually implement these mandates in a sustainable manner.

Meanwhile, efforts have been made to enroll as many people as possible in insurance through the exchanges before the March 31 deadline rolls around. The federal government announced recently that those who were unable to sign up for a marketplace plan due to technical difficulties can receive retroactive coverage, retroactive premium tax credits, and cost-sharing subsidies to the date that they originally applied. Even those who chose to buy insurance off-exchange due to the difficulties have the option to switch to a marketplace plan and receive retroactive subsidies. The federal exchange is honoring these offers; the fourteen states and the District of Columbia, which decided to establish their own exchanges, can choose whether or not to honor these options. Regardless, it is still unclear how the exchanges will determine who qualifies for these options and what documentation is necessary for qualification. The federal exchange is also attempting to deal with other glitches; in early February, the government announced that if enrollees have encountered benefit display errors, insurers are encouraged to honor the displayed information. If the insurers do not honor the information, consumers will be allowed to pick another plan of the same metal coverage level offered by the insurer. If they cannot find a good substitute with the insurer, consumers will have 60 days to choose a new on-exchange plan.

Consumers must sign up for health insurance- either on-exchange or off-exchange- prior to March 31, 2014 in order to not be charged the penalty for 2014. The next Open Enrollment Period will begin in November, 2014 for 2015 coverage. Until the next Open Enrollment Period, one cannot, with a few exceptions, purchase or change health insurance policies. However, there are a few circumstances that will trigger a Special Enrollment Period. This Special Enrollment Period is a period of 30 days following the following life events during which you are able to obtain new coverage:

·         Moving to a new state

·         Changes in income

·         Ceasing of prior pre-Obamacare coverage

·         Loss of job-based health coverage

·         Changes in family size

o   Marriage

o   Divorce

o   Having a baby

Under the aforementioned circumstances, one will be able to switch insurance policies. If a pre-Obamacare plan ends during the course of the year, one might be able to renew it according to the delay of implementation of the essential health benefits until 2016. Under other circumstances, one may be able to purchase insurance- either on or off-exchange- up to 30 days prior to the life event.

Some changes are approaching for the continuity of the HIX system into 2015. Currently 14 states and the District of Columbia operate their own exchanges; other states will now have until June 15, 2014 to determine whether they want to begin to operate their own exchanges. States that choose not to can still operate under the federal exchange. Also, the Open Enrollment Period for 2015 coverage on the exchange has been extended by a month; it will range from November 15, 2014 to February 15, 2015.

It is imperative to be aware of the changes in health insurance, and to stay on top of relevant dates.

Until next time,

Andrew Herman

Delaying Medicare Part B: When Do You Enroll?

Choosing whether to enroll in Medicare Part B when you turn 65 can be a tricky business. It is evident that one should enroll in Medicare Part A upon turning 65; Part A (which provides hospital care and related benefits) is free for many over 65 or otherwise eligible for Medicare. There are a few situations in which Part A will not be free: if you or your spouse has not worked and paid Medicare taxes for at least 10 years or if you are under 65 and disabled, but returned back to work. If you buy Part A coverage, you may pay up to $426 per month (down $15 per month from 2013).

However, it is not as clear-cut when one should enroll in Medicare Part B coverage. Part B (medical insurance) is the part of Medicare that typically carries the highest premium. The premium is primarily dependent upon household income, marital status, and manner of filing tax returns, as is seen to the right. The greater one’s income, the more one has to pay for a Medicare Part B premium each month. For most people with Medicare Part B, this premium is $104.90 per month.

Why might you choose to delay your Medicare Part B enrollment past turning 65? For many who do not retire by the age of 65, employer group health plans are preferable to Part B. You and/or your spouse may choose to delay enrolling in Medicare Part B if your employer group health plans have better medical and prescription drug benefits and/or lower costs. It is a wise idea to speak with both your employer and insurance agent to help make the best decision.

It is possible to delay your Medicare Part B enrollment without penalties, but you must proceed carefully. You can sign up for Part B without penalty at any time that you have health coverage based on current employment or during the 8-month Special Enrollment Period that begins after employment ends or after the eligible group health plan coverage ends- whichever is earlier. Eligible health coverage based on employment does not include COBRA continuation plans.

If you delay Medicare Part B enrollment and fail to sign up during the Special Enrollment Period, you will be penalized. You will have to wait until the next General Enrollment Period for Medicare Part B- from January 1 until March 31 of each year; Part B coverage obtained through the General Enrollment Period is not effective until July 1 of that year. Also, not obtaining Part B coverage during your Special Enrollment Period will make you susceptible to the late enrollment penalty. This penalty is an extra 10% of your Part B premium added on for each 12-month period that you could have had Part B coverage but didn’t. 

Let us give an example: Sally was first eligible for Part B coverage upon turning 65 in December, 2009. However, she still was employed and chose to keep her employer group health plan until retiring. She knew that she would retire in January 2013, so she let the policy end in December 2012. She did not apply for Medicare Part B during her 8-month Special Enrollment Period, so she will have to wait until January 1, 2014 to apply for Medicare Part B coverage during the General Enrollment Period (with penalty). Since Sally had been initially eligible to obtain Part B coverage in December 2009, and since it is now December 2013, Sally had four full 12-month periods for which she could have had Part B coverage but chose not to. She fit into the lowest income bracket for Medicare, so Sally’s base Part B premium for 2014 is $104.90. However these four years without Part B gives a total of a 40% penalty ($41.96) added to the base premium each month. Hence, Sally will have to pay a total premium of $146.86 each month in 2014. The 40% penalty would be added to all of Sally's Part B premiums beginning on July 1, 2014 and continuing for the duration of her Part B coverage.

There are more factors to put in the equation when choosing whether to delay Part B enrollment. First, Medicare Part B processing can take up to 90 days. Also, one can only enroll into Medicare Part C (Medicare Advantage) or a Medicare Supplement policy after Medicare Part B coverage is in place. Delays in Part B processing could make it more difficult, or even make the beneficiary unable to obtain a Part C or Medicare Supplement plan at the desired time.

In delaying enrollment, one must also be wary of delaying Medicare Part D (prescription drug plans). If you are considering keeping an employer group health plan after turning 65, you should discuss with your provider whether your group health plan offers creditable drug coverage. If not, it is advisable to obtain a Part D plan during your initial enrollment period (around the time of turning 65). If your group health plan does provide creditable coverage, there is no penalty for not obtaining Part D coverage while maintaining your group health plan. As in delaying Part B enrollment, you must be careful of timing when delaying Part D enrollment. After your group health plan ends, you will have a 63-day Special Election Period during which you can obtain Part D coverage without penalties or a delay in coverage. If you fail to sign up for Part D coverage during your Special Election Period, you will have to wait until the next Annual Election Period (from October 15 until December 7 each year) to obtain Part D coverage. You will also be subject to a penalty of 1% of the premium for each month you delayed Part D enrollment.

There is a better way to proceed when choosing to delay Part B and/or Part D enrollment: plan ahead. The trick to delaying these enrollment periods without penalty is knowing when you need coverage and planning ahead accordingly. If you know when you are going to retire or have your group health plan end, you should apply for Part B coverage a few months in advance, requesting an effective date corresponding to the date of your terminating coverage. This will prevent you from being hit with any penalties, and will also get you through the processing period before you actually need new coverage to begin. Furthermore, you can specify the desired effective date for your Medicare Part B coverage and any additional coverage, such as a Medicare Supplement and/or a Part D prescription drug plan.

For complete information on Medicare Enrollment, you can download the 2014 Medicare and You booklet here.

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.