New York Estate Planning & Elder Law Blog
The Centers for Medicare and Medicaid Studies recently announced it has extended its grace period to remove or reduce financial penalties for those late to switching their insurance from plans on the Affordable Care Act (ACA) to Medicare. As a result of moving the deadline, seniors and those on disability now have until September 30, 2018 to switch over from their ACA marketplace insurance plans to Medicare without having to pay increased Medicare premiums or reimburse the federal government for ACA subsidies.
For most Americans, Medicare eligibility begins at age 65 and are automatically signed up if already receiving Social Security benefits but not if the individual is already receiving health insurance through their job or spouse’s employment. If neither of these scenarios apply, individuals need to enroll in Medicare within six-months (three-months before or after) turning 65-years old.
Failing to enroll in Medicare in a timely manner can lead to very expensive penalties including increases to Medicare Part B premiums as much as 10 percent for each full 12-month period the individual should have been enrolled. The Medicare Rights Center (MRC), a nonprofit consumer service organization that works to ensure access to affordable health care for older adults, estimates that if someone turned 65 in 2010 and delayed signing up for Medicare until 2018, premiums would be $227, which is 70 percent higher than the base Part B premium of $134.
Under that scenario, Medicare Part B premium increases would total an additional $1,130 for the entire year and that is just for health insurance. Under CMS rules, Medicare Part D (which covers prescription drugs) premiums can also increase by 1 percent per month for each month of late enrollment. These penalties can add up to an extreme financial hardship for seniors and disabled persons living on fixed incomes trying to get access to quality healthcare and live comfortable, dignified lives.
Many who enrolled in ACA marketplace insurance plans before the age of 65 have chosen to keep these plans out of financial necessity as federal subsidies may have made these ACA plans less expensive than paying Medicare Part B premiums. Unfortunately, CMS does not consider enrollment in ACA exchange programs as a valid reason to delay Medicare enrollment and many sensors ended up paying huge financial penalties. Hopefully, the changes put forth by CMS will bring much needed relief to those transitioning from ACA plans and allow seniors more financial security.