The Medicare Economic Security Solutions Act modifies the Medicare Part B late enrollment penalty by increasing the rate to 15% per year, doubling the penalty duration based on non-enrollment time, and excluding periods of VA coverage from penalty calculations.
Nikema Williams
Representative
GA-5
The Medicare Economic Security Solutions Act aims to reform the Medicare Part B late enrollment penalty structure. This bill lowers the penalty rate, changes how long the penalty lasts, and excludes periods of coverage under COBRA, retiree plans, or VA health care from penalty calculations. Additionally, it removes employment status restrictions for qualifying for a special enrollment period when COBRA or retiree coverage ends.
Medicare Part B Penalty Rate Jumps to 15%, But VA Coverage Now Exempt from Penalties
The "Medicare Economic Security Solutions Act" is a mixed bag of policy changes that tweaks how Medicare Part B handles late enrollment. On one hand, it’s giving a huge break to people who had continuous coverage through the VA or former employers. On the other hand, for everyone else who misses the deadline, the penalty is about to get significantly more expensive and last longer.
The Good News: No Penalty for VA Coverage
If you’re a veteran relying on health coverage through the Department of Veterans Affairs (VA), this is a major win. Currently, if you delay signing up for Medicare Part B (which covers doctor visits and outpatient care) because you’re covered by the VA, you can still get hit with a lifetime penalty when you eventually enroll. This bill changes that. Section 3 specifically excludes months where an individual had coverage under Chapter 17 of Title 38, U.S. Code (VA coverage), COBRA, or retiree health plans from counting against you when calculating the late enrollment penalty.
Think about the 40-year-old veteran who retires from the military and uses VA benefits for two decades before needing Medicare. Under the old rules, they could have faced a massive, permanent penalty when they finally enrolled in Part B at 65. Now, those years of VA coverage are effectively ignored, saving them potentially hundreds of dollars a month for the rest of their lives. This change applies to premiums paid for months starting 90 days after the bill becomes law.
The Bad News: The Penalty Gets Harsher
Now for the tricky part: Section 2 adjusts the late enrollment penalty for everyone who doesn't have one of those specific exemptions (like VA or COBRA coverage) but still delays signing up. The penalty rate is increasing from 10% to 15% of the standard Part B premium for every 12-month period you were eligible but didn't enroll.
Even more significantly, the duration of that penalty is doubling. Under the bill, the penalty will now apply for a period that is twice the number of months you were previously unenrolled in Part B. If you delayed enrollment for three years without a valid reason, you’re not only paying a 45% penalty (15% x 3 years), but you’ll be paying that higher penalty for six years instead of three. This is a substantial financial hit for those who miss the enrollment window due to simple oversight or confusion, making it crucial to sign up on time.
Easier Access After Losing Employer Coverage
Finally, Section 4 addresses a common headache for people transitioning out of the workforce. When you lose health coverage from an employer (either through COBRA or retiree plans), you usually qualify for a Special Enrollment Period (SEP) for Medicare Part B. This bill cleans up the rules by striking the phrase "by reason of the individual's current employment status" from the SEP requirements.
What this means in practice is that the reason your COBRA or retiree coverage ended no longer has to be directly tied to your employment status. If your employer-sponsored coverage terminates for any reason—say, the company stops offering the plan entirely, or the COBRA period simply runs out—you still get that crucial SEP window to enroll in Part B without facing a penalty. This removes an unnecessary bureaucratic barrier, making the transition smoother for older workers and retirees.