Can I Delay Medicare Part D Enrollment?
This article was updated on: 10/21/2018
If you’re approaching Medicare eligibility, especially if you’re in good health, you probably have questions about just how much health-care coverage you really need. For many people, enrollment in Original Medicare (Part A and Part B) happens automatically when they become eligible, but Medicare Part D enrollment is not automatic. You may wonder whether it makes sense to delay enrolling in Medicare Part D (optional prescription drug coverage) until you really need the benefits. Before you decide, here’s what you may want to know about the Medicare Part D enrollment process and how it affects your health-care financial planning.
What is Medicare Part D?
The Medicare program is made up of four parts: Part A (hospital insurance), Part B (medical insurance), Part C (the Medicare Advantage program), and Part D (prescription drug coverage). Original Medicare doesn’t cover prescription drugs except in very limited circumstances (for example, Medicare Part A generally covers prescription drugs you receive as part of your inpatient care, and Part B may cover certain medications such as injections you receive in a doctor’s office). The daily medications you may take at home – perhaps to manage a chronic health condition or treat an illness — are not covered under Original Medicare. In the Medicare Modernization Act of 2003, Congress authorized Medicare Part D coverage for prescription drugs, but did not make it part of Original Medicare.
Medicare Part D prescription drug coverage is offered by private insurance companies contracted with Medicare. To get this optional coverage, you can either enroll in a stand-alone Medicare Prescription Drug Plan to supplement your Original Medicare benefits, or receive your Original Medicare benefits through a Medicare Advantage Prescription Drug plan. Medicare Advantage plans include Part A and Part B benefits, except for hospice care – this is still covered under Part A. Medicare Advantage plans often include additional benefits, such as routine dental services – and most include prescription drug coverage.
When you sign up for a stand-alone Medicare Part D Prescription Drug Plan or a Medicare Advantage Prescription Drug plan, you might pay a separate premium to the company that offers your plan (although some Medicare Advantage plans have premiums as low as $0). You’ll also need to keep paying your monthly Part B premium. You may have copayments, coinsurance amounts, and deductibles associated with your coverage. It’s important to consider all of these expenses when evaluating Medicare Part D enrollment.
Even if you’re healthy now and don’t take any prescription medications, be aware that if you don’t sign up for Medicare prescription drug coverage when you’re first eligible for Medicare, you could face a late-enrollment penalty if you need this coverage later on, as explained below.
When is the Medicare Part D enrollment period?
Your initial Medicare Part D enrollment period begins when you first become eligible for Medicare or when you turn 65. You can enroll in Medicare prescription drug coverage during the Initial Enrollment Period, or during the Annual Election Period that occurs each year. In some cases, you may sign up during one of the Special Election Periods (SEP). SEPs relate to specific events, such as leaving a health plan provided by your employer or union, moving to a new plan service area, or qualifying for Medicaid or Extra Help paying your Medicare Part D premium.
As mentioned above, if you don’t enroll in a Medicare plan option that includes prescription drug coverage when you first become eligible, in most cases you’ll have to pay a late-enrollment penalty with your monthly plan premium. You’ll typically pay this penalty if you ever do decide to sign up for Medicare prescription drug coverage, and the penalty will apply for as long as you have this kind of coverage.
What is the late penalty if I don’t enroll in Medicare Part D during my Medicare Initial Enrollment Period?
If you’re currently feeling well and you don’t take any prescription drugs on a daily basis, you may be tempted to delay Medicare Part D enrollment. That decision might cost you money, however, if you need prescription medications in the future. In some situations, prescription drugs for common conditions such as diabetes, heart disease, or high blood pressure can cost thousands of dollars per year.
In addition, the late-enrollment penalty isn’t a one-time fee; it’s a penalty that applies to your monthly premium for as long as you have Medicare prescription drug coverage. It’s calculated like this: Medicare multiplies 1% of the “national base premium” (which is $35.02 in 2018) by the number of months you delayed your Medicare Part D enrollment or didn’t have creditable coverage through another plan (such as an employer-based plan). Creditable prescription drug coverage is coverage that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage.
For example, if your Medicare Initial Enrollment Period ended on July 31, 2014, and you waited to sign up for Part D coverage until the Annual Election Period in October 2018, you would have gone without coverage for 50 full months. Your monthly late enrollment penalty would be $17.50 (1% of $35.02, the base premium, multiplied by 50, and rounded to the nearest 10 cents), which you’d pay in addition to your monthly plan premium. That means paying at least $210 extra every year for your Medicare prescription drug coverage, in that example scenario.
How can I avoid the Medicare Part D late enrollment penalty?
Here are three ways to avoid the late enrollment penalty:
- Enroll in Medicare Part D prescription drug coverage during your Medicare Initial Enrollment Period or (if applicable) a qualifying Special Election Period.
- Make sure you never go more than 63 consecutive days without creditable coverage for prescription drugs.
- Sign up for, or maintain, creditable prescription drug coverage through another source such as your current or former employer, TRICARE, your union, the Department of Veterans Affairs, or Indian Health Service (this is not a complete list).
If you still have questions about planning for your Medicare Part D enrollment, I’d like to help you find answers. To have me send you information via email, or to schedule a phone call with me, click one of the links below. See a list of plans we offer in your area by clicking the “Compare Plans” button.