How a Medicare rule that ends financial burdens for the incarcerated leaves some behind

Medicare expands enrollment periods for people released from prison after January 1, 2023, but offers no relief for people who have been paying premiums for zero Medicare benefits while incarcerated, nor for those released before 2023 who signed up late and are stuck paying jacked-up premiums.

by Emily Widra

As the prison population in the United States gets older, more and more incarcerated people have faced an expensive and unenviable choice when it comes to Medicare: pay for coverage you couldn’t use or afford, or pay increasingly higher premiums for the rest of your life once you were released. People incarcerated when they initially become eligible for Medicare — the national health insurance program for people 65 and older and some younger people with certain disability statuses — were expected to enroll and pay monthly premiums without access to any Medicare benefits or coverage. This rule has changed, but formerly incarcerated people released from prison prior to 2023 are left out of this reform and are expected to keep paying penalty fees for not signing up for Part B before release.

While the change marks an important shift in Medicare policy, it does nothing to alleviate the financial stress placed on formerly incarcerated people who are already being charged higher premiums. As one woman whose husband has been struggling with the implications of this unfair policy for years recently told us:

“My husband turned 65 while incarcerated with a long sentence. He signed up as required for Medicare Part A but when he signed up as required for Medicare Part B, he learned he was going to be charged a premium of $135 per month, even while incarcerated and earning just $20 per month. He disenrolled from Part B due to lack of funds. When he was released years later and tried to re-enroll in Part B, he was charged a penalty that would raise his premiums for the rest of his life - by about $50 per month - because he did not enroll at age 65. The penalty is waived for people who were covered by another group health insurance plan, but apparently, prison medical services don’t count.”

This past November, the Centers for Medicare and Medicaid (CMS) fixed this policy problem — effective January 1, 2023 — to create a Special Enrollment Period for recently released, formerly incarcerated people. The creation of a Special Enrollment Period allows formerly incarcerated people to enroll in Medicare in the 12 months following their release without facing any financial penalties for late enrollment. This is undoubtedly a good change, but it is not retroactive: as written, this policy only applies to people released from prison after January 1, 2023.

Because the letter writer’s husband was released a few years prior to this policy change, he will likely be stuck paying surcharged monthly premiums for his Medicare Part B coverage for the rest of his life. He is one of thousands of individuals released over the years who have found themselves, without warning, charged Medicare premium penalties in perpetuity because they didn’t sign up for a benefit they could neither use nor afford while incarcerated. For advocates and policymakers looking for an impactful way to reduce the collateral consequences of conviction and incarceration, particularly those that impact vulnerable populations like the elderly and disabled, this briefing provides the details you need to know to take action.

Medicare policies prior to the rule change

Medicare Part A is health insurance that covers hospitalizations and usually has no monthly premiums. Medicare Part B covers non-hospital medical care and requires beneficiaries to pay a monthly premium. The lowest monthly premium changes annually: in 2022, the lowest Part B premium was $170.10 per month and in 2023, the lowest Part B premium will be $164.90 per month. For most Medicare beneficiaries, the Part B premium is paid out of their Social Security payments.

Incarcerated people have historically been expected to enroll in Medicare Part A and Part B when they become eligible, usually when they turn 65 years old. This means that incarcerated people over 65 were expected to cover their monthly Part B premiums even though Medicare does not provide coverage for any healthcare services provided in prison and Social Security payments are suspended for the duration of their imprisonment. How and why the federal government expected incarcerated people to pay for Medicare that provides no benefits in prison — while withholding the usual means of paying for it (Social Security) — defied all logic. The penalties charged in perpetuity to people who enrolled late because of these policies are a further irrational injustice.

Additional penalties for the incarcerated and formerly incarcerated prior to the rule change

Most people in prison can not afford to pay the monthly premiums for Part B coverage while incarcerated. In the case of our letter writer, her husband was expected to pay $130 per month for Medicare Part B despite his only income being the $20 per month he made working in prison. This was likely the case for most incarcerated people. In our 2017 survey of prison wages, we found that the average wages for an incarcerated person ranges from $0.14 to $1.41 per hour, leaving people in prison with no way to make enough money to pay monthly Medicare premiums.

However, not enrolling in Medicare Part B when first eligible had significant financial consequences for incarcerated people: For every 12 months that someone was eligible for Part B coverage but was not enrolled, their future monthly premiums increased by 10%. Someone released in 2022 who enrolled late in Medicare Part B at age 67 is expected to pay a minimum of approximately $204.10 every month, a surcharge of 20% on top of the minimum Part B premium of $170.10.

When people eligible for Medicare are returning to their communities, medical care needs to be accessible and affordable, but if they haven’t been able to afford monthly premiums during their incarceration, the monthly premiums after their release — and for the rest of their lives — will be even higher. This is no way to set already-vulnerable people up for success during reentry.

New Medicare rules for formerly incarcerated people

For people released from prison after January 1, 2023, there are new Medicare enrollment rules that create a 12-month Special Enrollment Period during which recently released people can enroll in Medicare Part A and Part B without any financial penalties for late enrollment (known as “late enrollment penalties” or “LEPs”) due to incarceration. While we applaud this policy change, we are left wondering about the tens of thousands of people released from prison before January 1, 2023. The Centers for Medicare and Medicaid Services (CMS) said that it “does not have the authority” to waive LEPs paid in the past or currently being paid by formerly incarcerated people, because “LEPs are governed by statute.”

It is unreasonable to expect incarcerated people to be able to pay premiums while incarcerated or to afford surcharged monthly payments after their release, and the regulation changes reflect some understanding of this fact. The next step needed is to apply this same understanding to all formerly incarcerated people, not just those released after 2022. Members of Congress and advocates, take note!

Reforms should cover all people released from prison

The failure to apply these changes to people released from prison before January 1, 2023 inflicts real and lasting financial burdens — and health risks — on them and their families. The man whose wife wrote to us was expected to pay at least $1,600 a year in Medicare Part B premiums while earning just $240 per year — for benefits he could not even access while he was incarcerated. The alternative — not enrolling until release, and then paying a permanent late enrollment penalty — is no better. If he had been released in January 2022 at age 70 and immediately re-enrolled after disenrolling from Part B at 65, he would have been expected to pay at least $2,970 in premiums (including a penalty of a 50% surcharge each month) every year for the rest of his life. Meanwhile, a low-income person who was never incarcerated during their Medicare-eligible years and never disenrolled from Part B would be paying less than $1,980 per year for the same level of coverage. Formerly incarcerated people who were released prior to 2023 should not be forced to pay significantly higher monthly premiums simply because of their release date: this is not only unfair, but counterproductive when it comes to supporting low-income older adults and their reentry success. Congress should take immediate action to make these common-sense changes retroactive.

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For more information, including detailed footnotes, see the full version of this briefing on our website.