What Happens When a Plan Member Doesn't Pay Their Medicare

PARTNERS

partners

PARTNERS

CMS Product No. 11338-P

Revised April 2021

Information partners can use on:

What Happens When a Plan Member

Doesn’t Pay Their Medicare Plan Premiums?

is tip sheet explains what happens if a person with Medicare doesn’t pay the

premiums for their Medicare drug plan or health plan.

Can a plan disenroll a member for not paying their monthly

premium?

Yes, a plan can choose to disenroll a member who fails to pay plan premiums

after proper notice and the plan’s grace period. Disenrollment for failure to pay

plan premiums is optional for each plan, so it’s important for the member to

know the rules for that plan. The plan will tell members the policy and length

of the grace period (which must be at least 2 months) in the “Annual Notice of

Change” and “Evidence of Coverage” sent each fall. The plan must apply the

policy consistently to all members of the plan.

Note: A plan can also choose to disenroll a member who fails to pay the PartD

late enrollment penalty, which is part of the monthly premium members pay to

the plan. Generally, the plan charges the Part D late enrollment penalty monthly

for as long as the member has Part D coverage, even if the person switches plans.

If a plan charges a penalty, the member must pay the penalty amount even if

the plan doesn’t charge a premium. For more information about the Part D late

enrollment penalty, visit CMS.gov/partnerships/downloads/11222-P.pdf to view

“Information partners can use on: The Part D Late Enrollment Penalty.”

A plan can’t disenroll a member for failure to pay any outstanding monthly

premiums if the member has plan premiums deducted from their Social

Security payment. However, the plan may disenroll them for failure to pay an

outstanding premium in these situations:

• The plan finds out from Medicare that the deduction from the Social Security

or Railroad Retirement Board (RRB) payment has stopped.

• The request for premium deduction was initially rejected, and the plan bills

the member for their premiums until the deduction from Social Security (or

RRB) starts.

What are plans required to do before they disenroll a member

from the plan?

Plans are required to:

• Send a bill with the amount due and a due date.

• Send a written notice of non-payment. The notice must explain that the plan will

disenroll the person from the plan if they haven’t made full payment by the end of

the grace period.

Plans are encouraged to send additional notices or attempt to contact the member

about the late premiums prior to the end of the grace period. If the person with

Medicare still doesn’t pay the amount that’s past due, the plan can disenroll them

as of the rst day of the month following the end of the grace period. When this

happens, the plan will send a nal notice to the member about the disenrollment.

How does the grace period work?

A plan must give a grace period of at least 2 calendar months. Some plans may

choose to provide a longer grace period.

Example: Plan XYZ has a 2-month grace period for premium payment. Mr.Smith’s

premium was due on February 1. He didn’t pay this premium. OnFebruary 7,

the plan sent a non-payment notice to Mr. Smith. He ignored this notice and the

follow-up premium bills. The grace period includes the months of February and

March. If Mr. Smith doesn’t pay his plan premium before the end of March, he’ll be

disenrolled as of April 1.

Can a plan disenroll a member for not paying their Part

D-Income Related Monthly Adjustment Amount (Part D-IRMAA)?

People with higher incomes are assessed a Part D-IRMAA that they pay directly to

the government, not to their Medicare drug plan or Medicare health plan with drug

coverage. Medicare has established a 3-month initial grace period before members

can be disenrolled from their plan because they failed to pay their Part D-IRMAA.

After the 3-month grace period, Medicare will tell the plan to disenroll the member.

The plan must send the member a written notice of disenrollment within 10

calendar days of being notified by Medicare. A member may be disenrolled from

a Medicare Advantage Plan or employer group health plan if that plan includes

their Medicare drug coverage.

What happens after a plan disenrolls a member from the plan?

Once a plan disenrolls a member from the plan, the person must wait until

the next available enrollment period to join another plan. Someone who’s

disenrolled from a Medicare Advantage Plan will automatically be enrolled in

Original Medicare. Generally, people with Medicare can make changes to their

coverage between October 15–December 7 each year, unless they qualify for a

Special Enrollment Period.

Important for people losing Medicare drug coverage: If there’s a period of 63

days or more in a row when the person with Medicare isn’t enrolled in Medicare

drug coverage and doesn’t have other creditable prescription drug coverage,

they may have to pay a monthly Part D late enrollment penalty when they join a

new plan. Creditable prescription drug coverage is coverage (for example, from

an employer or union) that’s expected to pay, on average, at least as much as

Medicare’s standard drug coverage.

Can a member re-enroll in Medicare drug coverage if they

repay the drug premium?

Yes. If a Medicare plan disenrolls a member for failing to pay drug premiums

and the member wants to re-enroll in the plan, the Medicare plan may require

them to pay any outstanding premiums owed before accepting the enrollment

request. Also, the member must re-enroll during a valid enrollment period,

since payment of past due drug premiums after disenrollment doesn’t create

an opportunity for reinstatement into the plan. Re-enrollments after losing

coverage for nonpayment of drug premiums are never retroactive.

A member may also ask to get their coverage back through reinstatement under

Medicare’s “Good Cause” policy, if the member can show a good reason for not

paying the premiums within the grace period, like an emergency or unexpected

situation that kept a member from paying their premium on time. If the plan

approves the request, the member will have to pay all owed premium amounts

within 3 months of the disenrollment to get the coverage back. To request Good

Cause, members should contact their plan as soon as possible, but no later than

60 calendar days after the disenrollment effective date.

Where can plan members get more information?

• Their plan, for more information about disenrollment and premium payment

options. Each plan may have different rules for disenrolling members who fail to

pay plan premiums. Plans may also offer other premium payment options, like

monthly credit card billing or Electronic Funds Transfer.

• 1-800-MEDICARE (1-800-633-4227), if they have questions about disenrollment

for non-payment of Part D-IRMAA. TTYusers can call 1-877-486-2048.

• Social Security at 1-800-772-1213, if they have questions about their

Part D-IRMAA assessed amount. TTY users can call 1-800-325-0778.

You have the right to get Medicare information in an accessible format,

like large print, Braille, or audio. You also have the right to file a complaint

if you feel you’ve been discriminated against. Visit Medicare.gov/about-

us/nondiscrimination/accessibility-nondiscrimination.html, or call

1-800-MEDICARE (1-800-633-4227) for more information. TTY users can call

1-877-486-2048.

This product was produced at U.S. taxpayer expense.