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Medicare Enrollment Delays Costly, Study Finds

February 4, 2005
More than 738,000 older and disabled Americans pay lifetime premium penalties for delaying enrollment in Medicare Part B, a new Medicare Rights Center report charges.

Under current law, people who delay enrolling in Part B pay a lifetime penalty of 10 percent of the premium per year for each year that enrollment is delayed. However, the survey of state counseling services found that 63 percent of people with Medicare do not know how their employer health coverage coordinates with Medicare.

The report, based on months of analysis and a nationwide survey of state Medicare counseling services, found that delayed enrollment in Medicare was largely the result of consumer confusion about enrollment rules compounded by government agencies routinely providing wrong information to men and women eligible for Medicare.

The Medicare Rights Center study also found that late enrollment was caused by the unaffordability of Part B premiums (a record high $78.20 per month in 2005) and that many low-income people were unaware of programs that would pay those premiums.

Robert M. Hayes, president of the Medicare Rights Center, a national consumer service organization, called on the Centers for Medicare and Medicaid Services to create a “high-level and aggressive consumer ombudsman office” as required by the Medicare legislation enacted in December 2003.

“Consumer education must be the priority,” he said, “and the need is about to grow exponentially.”

“The new drug benefit requires the 41 million Americans with Medicare to make many more tough decisions about when and what programs to apply for and enroll in,” said Hayes. “A dangerous consequence of choice can be rampant confusion. We see from this study the great need to improve consumer education.”

“With the complexity of the new drug benefit, Medicare could be headed into absolute chaos,” Hayes said. “The Medicare ombudsman must be aggressive, independent, visible and able to bring creativity and resources into consumer education.”

Understanding how other insurance coordinates with Medicare is necessary for people eligible for Medicare to know whether they should enroll in Medicare at age 65, when most people first become eligible.

The penalty for delayed enrollment in the new drug benefit is more severe, the report says. The penalty is 1 percent per month of the drug benefit premium for each month enrollment is delayed and, Hayes said, many people will face uncertainty as to whether the drug benefit will help them even in the face of later penalties.

In “Medicare Transitions: Simple Steps for Centers for Medicare and Medicaid Services to Bolster Consumer Information and Counseling,” the Medicare Rights Center makes several recommendations including that the Centers for Medicare and Medicaid Services:

• revise its “Welcome to Medicare” enrollment packet to emphasize the risk related to declining Part B enrollment;

• use available intermediaries such as employers, dialysis centers, other providers and insurance carriers to help people with employer-sponsored insurance understand their coverage options and make transition decisions that best meet their needs;

• vigorously implement the Medicare Beneficiary Ombudsman program and include within its purview upgrading the information infrastructure that serves Medicare beneficiaries;

• make clear and objective information available to people eligible for Medicare Part, the new Medicare drug benefit

“Medicare Transitions: Simple Steps for Centers for Medicare and Medicaid Services to Bolster Consumer Information and Counseling” is available online at www.medicarerights.org/cobissuebriefframeset.html.

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