If you are enrolling in Medicare, you may question whether you really need Part D prescription drug coverage. You pay a monthly premium for Part D, and it may feel like an unnecessary expense if you don’t take any prescription drugs. Or, you may have other prescription benefits and wonder if you need Part D too.
Skipping Part D coverage can be an expensive decision, depending on your situation. You may find yourself without insurance to cover medications if you suddenly become ill. And when you finally do enroll, you may pay a Medicare Part D penalty in the form of a higher premium for the rest of your life.
What is the Medicare Part D Late Enrollment Penalty?
When you first become eligible for Medicare, you have an initial seven-month enrollment period to sign up for coverage, including Part D. If you are eligible because you are 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 will pay a Medicare Part D penalty if you go without one of these types of prescription drug plans for 63 days or more:
- A Medicare Part D plan
- Prescription coverage through a Medicare Advantage (Part C) 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.
How Much is the Medicare Part D Late Enrollment Penalty?
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 2018, the beneficiary premium is $35.02.
This is not a one-time penalty. You will pay it every month for as long as you have Medicare prescription coverage. Your Medicare Part D penalty will be rounded to the nearest $.10 and added to your Part D premium. And because it is always based on the current year’s national beneficiary premium, it may change or go up each year.
Here’s an example to show how this works. Suppose your IEP ended and you waited 33 months to sign up for Part D. Your Medicare Part D penalty would be 33 percent of the national beneficiary premium – one percent for each of the 33 months you waited. For 2018, this would be calculated as $35.02 x .33 = $11.56. Because the Medicare Part D penalty is rounded to the nearest 10 cents, you would pay an additional $11.60 each month.
Are there other Drawbacks to Waiting to Enroll in a Part D Plan?
You can’t just enroll in Part D whenever you want. After your initial enrollment period ends, you can usually only enroll during the Open Enrollment Period that runs from October 15 to December 7 each year. That means that if you wait to sign up for Part D, you may find yourself paying full price for expensive medications if you suddenly become ill.
What if I already have Prescription Drug Coverage?
If you already have coverage through an employer, union, or another source, you may not have to worry about the Part D penalty. The key is whether the coverage you now have is “creditable.” Creditable coverage is the same as, or better than, the benefits Medicare provides.
- You will not accumulate any penalties during the time you have other creditable coverage. If you lose this coverage through no fault of your own, you should be eligible for a special enrollment period. As long as you sign up within 63 days of losing coverage, you will not have to pay penalties.
- You should receive a notice each year saying whether your coverage is creditable. Save this letter with your important papers – you may have to show it to Medicare to avoid a penalty if you eventually enroll in Part D.
How to Appeal the Medicare Part D Late Enrollment Penalty
If you were penalized by Medicare, you have the opportunity to appeal it. All you have to do is complete the reconsideration request form on Medicare.gov.
Find a Medicare Supplemental Drug Plan Now
In choosing Medicare coverage, it is important to plan ahead to avoid penalties and minimize your costs. At MedicareFAQ, we are here to help. We will research the top plans in your area, answer your questions, and give you a quote on the best coverage for your situation. You can find Medicare Part D Guides here.