Client Study: Medicare D Penalties

Just this past week we helped a new client enroll in Medicare D for the first time. Unbeknownst to them, they were about to encounter two big penalties – Delayed Enrollment & Income Related Monthly Adjustment Amount (IRMAA).

“Sally” is a 73 year old widow in excellent health. Due to a combination of factors including with her solid financial status and not wanting to face the morass of Medicare enrollment, she had neglected to enroll during her initial enrollment period which was eight years ago. .

When we sat down to calculate the monthly penalty she would incur, she was shocked to learn the magnitude of the penalty she faced and that it would affect her premiums for the full duration of her enrollment. Anyone who delays or suspends enrollment in their Medicare product for more than 63 days is subject to this stinger.

To calculate a Delayed Enrollment Penalty, Medicare calculates the penalty by applying 1% of the National Premium Average ($33.19 for 2019 enrollments) times the number of full, uncovered months you didn’t have Part D or creditable coverage.

For Sally, this meant, 99 months (Oct 2018 minus June 2010 = 99 months) without coverage and a whopping $34.70 added to her monthly bill. Considering that her regular premium is $27.40 for her selected Medicare D product, this was a shocker.

To add to the dilemma, because her Modified Adjusted Gross Income (MAGI) is in excess of $125,000 this year, Sally classifies as a “High Earning Senior” . Based on this, she is also subject to “The Medicare Income Related Monthly Adjustment Amount” which is going to tack on an additional $31.90 per month to her premium.

2019 Medicare Part D IRMAA is shown below.
Beneficiaries who file individual tax returns with income that is: Beneficiaries who file joint tax returns with income that is: Medicare Part D Income Related Monthly Adjustment Amount
Less than or equal to $85,000 Less than or equal to $170,000 $0.00
Greater than $85,000 and less than or equal to $107,000 Greater than $170,000 and less than or equal to $214,000 $12.40
Greater than $107,000 and less than or equal to $133,500 Greater than $214,000 and less than or equal to $267,000 $31.90
Greater than $133,500 and less than or equal to $160,000 Greater than $267,000 and less than or equal to $320,000 $51.40
Greater than $160,000 and less than or equal to $214,000 Greater than $320,000 and less than or equal to $428,000 $70.90
Greater than $214,000 and less than or equal to $500,000 Greater than $428,000 and less than or equal to $750,000 $70.90
Greater than $500,000 Greater than $750,000 $77.40

In one hour, Sally learned that her monthly out of pocket cost, before seeing any benefits, is now $94.00 which is a dramatic increase from the $27.40 premium for her selected Medicare D product.

Is there any relief for Sally? Perhaps, filing an appeal on both of these penalties will be worth the trouble. Senior Checks and Balances can help her complete is a Request for Reconsideration as well as a Late Enrollment (LEP) Reconsideration Form.


Senior Security: Fraud & Identity Theft

When you consider fraud & identity theft, the first culprits that come to mind are telemarketers, when actually, those closest to the targeted victim are most likely the offender. This includes financial advisors, home health workers and even family members.

dreamstime_xxl_91269790According to The National Adult Protective Services Association:

  • 1 in 9 seniors reported being abused, neglected or exploited in the past twelve months; the rate of financial exploitation is extremely high, with 1 in 20 older adults indicating some form of perceived financial mistreatment having occurred in the recent past
  • Elder abuse is vastly under-reported with only 1 in 44 cases of financial abuse is ever reported
  • Abused seniors are 3 times more likely to die, and elder abuse victims are 4 times more likely to go into a nursing home
  • 90% of abusers are family members or trusted others
  • Almost 1 in 10 financial abuse victims will eventually rely on Medicaid as a direct result of their own monies being stolen from them
  • Cognitive impairment and the need for help with activities of daily living make victims more vulnerable to financial abuse.

The methods that can be used to cheat you or your loved one out of life savings and future financial security can be truly insidious. Recently, I received a call from a family seeking help for their father after he had shared his Social Security number with his new neighbor on the premise that he would be part of a mythical real estate investment.

What is the best course of action to create a wall around finances and your personal security?

  1. Put a freeze on your credit. By contacting TransUnion or Experian credit bureaus, you can put your credit on lock down, so  potential perpetrators can’t open an account. This is one of the few preventative steps you can take. With PIN access, credit can be “re-activated” for use as appropriate.
  2. Enrolling in Life Lock is where the internet works for you. You can scour the net for any of your information to if a new account is opened in your name or if there have been changes to your credit.
  3. Careful vetting of your “guardians” – your trusted circle that help maintain home, health and lifestyle. This group includes your CPA, estate lawyer, financial advisor, physicians, daily money manager and even your insurance agent. Each of these individuals should come from personal recommendations from friends and family but also bear endorsements from local and national organizations that you can verify directly.
  4. Do you have help within the home? Employing housekeepers to handymen to home health aides, while necessary, unfortunately, also carry an inherent risk. Following is a laundry list of security steps that everyone should take prior to employing regular help within the home. This includes but is not limited to:
    • Removal of any/all account or statement information including bank information, estate plans, utility bills, and real estate documentationThe list is extensive. This critical information can be stored with a loved one or kept in a lock box.
    • Depending on health status and other factors, forwarding mail to a PO Box or a trusted individual may be wise. Likewise, if your senior is comfortable not having paper records, activating paperless billing & statements is a safe bet.
    • PIN numbers and passwords must be activated on cable/internet access. Employees who run up Pay Per View charges and spend working hours surfing the web qualify as abusive.
    • Install a personal safe or rent a safety deposit box for valuables.
    • Conduct or ask for background checks: how and when were they last completed?
  5. Passwords. Each account needs security and must be guarded. It is a fact of life today that the financial world is digital; and the trail of logins, passwords, payment information, and other sensitive personal information can lead to abuse. Use a digital password keeper like LastPass or DashLane to keep your information accessible while still secure. Further, you can designate a POA or another trusted individual with access, so that in the case of emergency, you can be assured that bills are continually paid and finances stay on track.

What’s still at stake despite all these measures? Your Social Security number can still be used for medical and tax fraud.

Medical identity theft is on the rise as it enables the perpetrator to obtain drugs or submit fake bills in your name. Your best course of action is to keep a record of all Explanation of Benefits (EOBs) and immediately flag any unfamiliar charges.

Tax identity theft occurs when an individual files a false report under your name to obtain a refund. Filing early and quickly is the safest way to avoid this, because any subsequent attempts to file will be rejected by the IRS. Be organized throughout the year, so when January rolls around, you can swiftly hand off your tax package to your vetted and trusted CPA.

In summary, securing your identity and your finances requires ongoing attention and support. Incoming mail, email, statements and billing require scrutiny and evaluation. Engaging your Guardians and family to assist is the first step to creating your own firewall of safety.