One of my new clients just called and she was very confused because she and her husband just went on Medicare Part B after having been on their group insurance. They are in their late 60’s. One of the processes is to go to the local social security office and obtain a document that you sign and your employer signs stating you had creditable drug coverage while under the group insurance. This is mandatory that your employer complete part of the application and state that you had creditable drug coverage. You must turn that into social security before they approve your Medicare application for Part B.
Now you’ve submitted the paperwork and have been approved for Medicare Part B. You meet with a broker who either put you on a Medicare Advantage program with drug coverage or a Medicare Supplement with a separate drug plan. Either way the plan is approved and the first thing you get in the mail is a letter from either the insurance company telling you the CMS (Centers for Medicare/Medicaid) does not have proof that you have creditable drug coverage so, therefore, you will be fined 1% per month for every month you didn’t have coverage (based on the current year’s average monthly premium, which increases annually) for the rest of your life.
Doesn’t sound like much but it will add up over the years.
But wait, you had creditable coverage which you had to prove prior to getting Medicare Part B? Why is the government asking the question again and/or billing you? Well, this is another example of the federal government wasting time and money that could be spent elsewhere. It’s also a major annoyance for all concerned. You have to get the creditable coverage letter, turn it into the insurance company or do a verbal attestation over the phone. This sometimes eliminated the problem but in some cases, you might get another letter. You then have to start the entire process over again.
This entire process could be avoided if CMS used the creditable coverage statement when you applied for Medicare Part B and the issue goes away. My question is why are they not doing that? I’ve asked several officials and all I get is that’s the way they’ve always done it and see no reason to change. Not what I want to hear so after the election I’m going to start a campaign to get this fixed. It’s about time.
The Barend Agency Inc.
Len Barend, Broker