If beneficiaries delay enrolling in Part B upon initial eligibility for Medicare because of continued employment insurance coverage, do they qualify for a SEP for Part D when no longer employed? If so, when does it start and how long does it last? If beneficiaries instead wait until the Annual Enrollment Period (AEP) (with the plan going into effect on January 1), would they receive a penalty?

All beneficiaries are entitled to a two-month SEP upon an involuntary loss of creditable coverage (including insurance through an employer). This SEP begins upon notice of the loss of coverage and ends upon enrollment into a drug plan, 60 days after the loss occurs, or 60 days after notice, whichever is later.

Only beneficiaries who qualify for the low-income subsidy are exempt from the late enrollment penalty. For beneficiaries who wait to enroll in Part D and have more than 60 days without creditable coverage, there will be a penalty assessed for each uncovered month. There is no penalty if the beneficiary qualifies for LIS.

Source: http://www.hapnetwork.org/assets/pdfs/2008-lep-9-24-2007.pdf

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