If you’re enrolling in Medicare, you may question whether you really need Part D prescription drug coverage. Beneficiaries pay a monthly premium for Part D, it may feel like an unnecessary expense if you don’t take any prescriptions. You may have other prescription benefits and wonder if you need Part D.
Skipping Part D can be a costly decision, depending on your situation. You may find yourself without insurance to cover medications if you suddenly become ill.
Then, when you finally do enroll, you may pay a Medicare Part D late enrollment penalty. This will be in the form of a higher premium for as long as you have Part D.
What is the Medicare Part D Late Enrollment Penalty?
If eligible because you’re turning 65, your Initial Enrollment Period begins three months before your 65th birthday month and ends three months after your birthday month.
After that IEP, you’ll pay a Part D late penalty if you go without one of these types of drug plans for 63 days or more:
- A Part D plan
- Prescription coverage through a Medicare Advantage plan
- Any other Medicare plan that includes Medicare PDP coverage
- Another healthcare plan that includes prescription drug coverage that is at least as good as the coverage provided by Medicare.
Medicare Part D Late Enrollment Penalty Calculator
The Medicare Part D penalty is based on the number of months you went without PDP coverage. For each month without coverage, you will pay an additional premium of 1 percent of the current “national base beneficiary premium.”
For 2021, the average beneficiary premium is $33.06.
This is not a one-time penalty. You’ll pay it every month for as long as you have Medicare prescription coverage. Your Part D penalty will be rounded to the nearest $.10 and added to your Part D premium.
Since the penalty is always based on the current year’s national beneficiary premium, it may change or go up each year.
Part D late enrollment penalty calculation can be hard to figure out. So, here’s an example to show how this works.
Suppose your Initial Enrollment Period ended and you waited 33 months to sign up for Part D. Your Part D penalty would be 33 percent of the national beneficiary premium, one percent for each of the 33 months you waited.
This would be calculated as $33.06 x .33 = $10.90. The Part D penalty is rounded to the nearest 10 cents.
You’ll pay this penalty in addition to your Part D Premium. The best way to avoid paying the Part D late enrollment penalty is to enroll in a Prescription Drug plan as soon as you become Medicare eligible.
Part D When Collecting Social Security Disability Income
If you don’t enroll in Part D when you’re first eligible, even if you’re eligibility comes from disability, you’re going to incur a penalty. To avoid the penalty, keep up with your Medicare eligibility, know your Part B effective date, and sign up for Part D as soon as possible. Just because you’re not 65, doesn’t mean the penalty doesn’t apply; the penalty DOES apply to anyone with Medicare Part B. So, don’t delay your enrollment.
Medicare Part D Late Enrollment Penalty Reconsideration
If you’re penalized by Medicare, you can appeal it. All you must do is complete a reconsideration request form that’s available on CMS.gov.
If you qualify for extra help, you may qualify for assistance paying the Part D penalty. Some lower-income beneficiaries have the penalty waived altogether. You can contact Social Security to apply for Medicare Extra Help.
How to Get Help Deciding When to Enroll in Part D
In choosing Medicare coverage, it's important to plan to avoid penalties and minimize your costs. We see the trend in rising prescription costs, so we are here to help. We research the top plans in your area, answer questions, and give quotes on the best coverage for your situation. Call us at the number above, or complete our rate form online.