Whether or not you take prescription drugs, you may want to consider your options carefully when it comes to joining Medicare Part D. Unless you have other, creditable coverage offered through work or a union, going without prescription drug benefits may end up costing you money. Coverage is optional, but without the right guidance, you could end up paying a higher premium from a late enrollment penalty.
Avoid the Penalty
Join when you are first eligible, during your Initial Enrollment period.
Maintain creditable coverage (other prescription drug coverage) through an employer, union, or other health insurance provider.
If you do not currently have prescription drug benefits through an employer or other source, the best time to join is when you are first eligible, during your Initial Enrollment period. Even if you do not need medications now, joining during Initial Enrollment ensures you avoid paying a late enrollment penalty.
Not everyone needs to join when they are first eligible, and many seniors delay enrollment without paying a penalty. Many employer-provided health insurance plans offer drug coverage that is considered “creditable” by Medicare.
If you do have drug benefits, as long as you are covered, you do not need to join. However, if you lose coverage (employer benefits end or COBRA ends) you only have a certain amount of time to join without penalty.
If You are Penalized, Here’s How to Calculate Your Premium
If you go without a Medicare prescription drug plan (Part D) or other creditable coverage for 63 days or more after your Initial Enrollment period ends, you may owe a late enrollment penalty. Penalties are calculated by multiplying the Part D premium amount by the number of full months you went without Part D or creditable drug coverage. Penalties are added to your monthly Part D premium for as long as you have coverage. For example, if you went 6 months without creditable coverage, your penalty would be .06 (for 6 months without coverage) times 35.63 (Part D premium) for a total of 2.13. Medicare rounds to the nearest .10, making your penalty $2.10 added to your Part D premium. Note: penalties are recalculated as annual premiums increase.
References:
Part D Penalty: https://www.medicare.gov/part-d/costs/penalty/part-d-late-enrollment-penalty.html
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