A Concurrent Resolution urging the Congress and President of the United States to limit the duration and amount of late enrollment penalties in Parts B and D of the federal Medicare program.

Whereas, Medicare is the federal insurance program providing health coverage for individuals age 65 and over and for certain individuals with disabilities and consists of four parts, referred to as Parts A through D; and

Whereas, Part B of the Medicare program covers a broad range of medical services and supplies, including physician services, laboratory services, durable medical equipment, and outpatient hospital services; and

Whereas, Enrollment in Medicare Part B is voluntary, and enrollees must pay a monthly premium for Part B coverage; and

Whereas, Older individuals receiving Social Security or Railroad Retirement Board (RRB) benefits are automatically enrolled in Medicare Part B at age 65, and individuals with disabilities who have received Social Security or RRB cash payments for 24 months are also automatically enrolled, although individuals in both groups have the option of declining Part B coverage; and

Whereas, Older individuals who are not automatically enrolled in Medicare Part B may sign up: during a seven-month-long initial enrollment period that begins three months before the month in which the individual turns 65; or during a subsequent general enrollment period; and

Whereas, Certain Medicare Part B enrollees may be subject to late enrollment penalties, including: individuals who do not apply for Medicare Part B coverage during their initial enrollment periods or who do not accept automatic enrollments in Medicare Part B but who apply for Part B coverage at a later date; and individuals who reenroll in Medicare Part B after earlier terminations of their Part B coverage; and

Whereas, The Part B late enrollment penalty is a monthly premium surcharge equal to 10 percent of an individual's monthly Part B premium for each full 12 months of delay in enrollment or reenrollment during which period the individual was eligible for Medicare; and

Whereas, There is no upper limit on the total Part B late enrollment penalty that may apply to an individual, and the penalty continues to apply for the entire time that the individual is enrolled in Medicare Part B; and

Whereas, Only certain individuals may be exempt from the Part B late enrollment penalty, such as: working individuals with group health coverage and their spouses; certain military retirees; certain international volunteers; and individuals who based their non-enrollment decision on incorrect information provided by a federal representative; and

Whereas, According to data from the federal Centers for Medicare & Medicaid Services, the Medicare Part B premiums of enrollees paying the Part B late enrollment penalty in 2011 were, on average, about 32 percent higher than the premiums would have been if they were not subject to the penalty; and

Whereas, Part D of the Medicare program provides optional outpatient prescription drug coverage to persons enrolled in Medicare, with Part D enrollees paying a monthly premium for coverage; and

Whereas, All individuals enrolled in Medicare Part A or Medicare Part B are eligible to enroll in a prescription drug plan under Part D, with individuals enrolled in the traditional, federally administered Medicare program obtaining drug coverage through private prescription drug plans and individuals enrolled in a Medicare Advantage managed care plan generally obtaining drug coverage through a prescription drug plan offered by their Medicare Advantage organization; and

Whereas, Beneficiaries can enroll in a Medicare Part D plan, or change plan enrollment, when they first become eligible for Medicare or during subsequent annual open enrollment periods; and

Whereas, Similar to Medicare Part B, individuals may sign up for Medicare Part D during a seven-month-long initial enrollment period that begins three months before the month of Medicare eligibility; and

Whereas, A Medicare Part D enrollee may be subject to a late enrollment penalty if: the individual does not enroll in Medicare Part D during an initial enrollment period or reenrolls in Medicare Part D after a break in Part D coverage; and there are 63 or more consecutive days in a period of Part D non-enrollment during which the individual does not otherwise maintain creditable prescription drug coverage; and

Whereas, Creditable prescription drug coverage, also known as "creditable coverage," includes military coverage or retiree health coverage offered by a former employer or union that pays at least as much, on average, as Medicare's standard prescription drug coverage; and

Whereas, Certain Medicare Part D enrollees who qualify for low-income subsidies to reduce or eliminate Part D out-of-pocket expenses are not subject to the late enrollment penalty; and

Whereas, The Part D late enrollment penalty is a monthly premium surcharge equal to one percent of a national base beneficiary premium, which is $32.42 in 2014 and is adjusted annually, for each full, uncovered month that a person was eligible to join a Medicare Part D drug plan and did not join; and

Whereas, There is no upper limit on the total Part D late enrollment penalty that may apply to an individual, and the penalty continues to apply for the entire time that the individual is enrolled in Medicare Part D; and

Whereas, There are significant differences among Medicare Part D plans in terms of benefit design, drugs included on plan formularies, applicable cost-sharing for particular drugs, pharmacy networks, and monthly premiums, and new beneficiaries may require significant time and research to navigate the complex system of health plans and make informed choices regarding their Part D coverage; and

Whereas, The decision of whether to enroll in Medicare Part B may present similarly complex decisions involving the relationship between Part B coverage and health coverage provided by a current or former employer, the costs of monthly Part B premiums, and the tradeoffs of enrolling in Part B upon initial eligibility or deferring enrollment; and

Whereas, Some new Medicare beneficiaries may also struggle with barriers to accessing information and making timely decisions regarding coverage through Medicare Parts B and D, such as: limited Internet access or limited technological skills; low literacy or limited English proficiency; age-related changes in vision, hearing, or cognition; stroke, Alzheimer's disease, Parkinson's disease, or other conditions that might reduce an individual's ability to obtain, understand, and act upon relevant information; or isolation from family members or friends who might assist with research and decision making; and

Whereas, Beneficiaries who do not enroll in Medicare Parts B and D in a timely manner due to these barriers, complex personal or financial circumstances, or other factors beyond their control should not be unduly penalized by potentially large late enrollment penalties that are imposed in perpetuity; and

Whereas, The Medicare Parts B and D late enrollment penalties were designed to create strong incentives for all eligible beneficiaries to enroll in the programs, thereby spreading program costs across a broad pool of beneficiaries and preventing a situation known as "adverse selection," whereby the disproportionate enrollment of more costly, less healthy beneficiaries would cause dramatically increased program costs; and

Whereas, Adverse selection might continue to prevented, with less harmful financial impacts on late enrollees, if the late enrollment penalties were retained but were limited in duration and amount; and

Whereas, This Legislature wishes to provide relief to Medicare enrollees facing late enrollment penalties while continuing to address the problem of adverse selection in Medicare Parts B and D by urging the Congress and President of the United States to amend federal Medicare law to limit the duration and amount of any late enrollment penalties applying to individuals receiving health coverage through Medicare Parts B and D; now, therefore,

Be It Resolved by the General Assembly of the State of New Jersey (the Senate concurring):

1. This Legislature respectfully urges the Congress and President of the United States to enact legislation amending Title XVIII of the federal Social Security Act (42 U.S.C. s.1395 et seq.) to limit the duration and amount of any late enrollment penalties applying to individuals receiving health coverage through Part B or Part D of the federal Medicare program.

2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly or the Secretary of the Senate to the presiding officers of the United States Congress, every member of the United States Congress elected from this State, and the President of the United States.

STATEMENT

This concurrent resolution respectfully urges the Congress and President of the United States to enact legislation limiting the duration and amount of any late enrollment penalties applying to individuals receiving health coverage through Part B or Part D of the federal Medicare program.

Medicare Part B provides coverage for medical services and supplies, including physician services, laboratory services, durable medical equipment, and outpatient hospital services. Enrollment in Medicare Part B is voluntary and enrollees must pay a monthly premium. Certain Part B enrollees may be subject to late enrollment penalties, including: individuals who do not apply for Part B coverage during their initial enrollment periods or who do not accept automatic enrollments; and individuals who reenroll after earlier terminations of Part B coverage. The Part B late enrollment penalty is a surcharge equal to 10 percent of an individual's monthly Part B premium for each full 12 months of delay in enrollment or reenrollment during which the individual was eligible for Medicare.

Medicare Part D provides outpatient prescription drug coverage to persons enrolled in Medicare. As with Medicare Part B, enrollment in Medicare Part D is voluntary and requires a monthly premium. A Part D enrollee may be subject to a late enrollment penalty if: the individual does not enroll during an initial enrollment period or reenrolls after a break in Part D coverage; and there are 63 or more consecutive days in the period of Part D non-enrollment during which the individual does not otherwise maintain certain "creditable" prescription drug coverage. The Part D late enrollment penalty is a surcharge equal to one percent of an annually adjusted, national base beneficiary premium for each full, uncovered month that the person was eligible to join a Medicare Part D drug plan and did not join.

The late enrollment penalties for Medicare Parts B and D have no upper limit and apply for the entire time that an individual is enrolled in the programs. Although the late enrollment penalties were intended to encourage a broad pool of individuals to enroll in both programs, in order to prevent problems of "adverse selection" arising from disproportionate enrollments of less healthy, more costly individuals, some Medicare enrollees may struggle with significant barriers to accessing information and making timely decisions regarding coverage under Parts B and D.

This resolution urges the Congress and President to alter the Medicare program so that late enrollment penalties are retained but limited in duration and amount, thereby continuing to prevent adverse selection while mitigating the financial impacts of late enrollment penalties on Medicare enrollees.