What if I Decide Not to Sign Up for a Medicare Prescription Drug Plan?

Steven Mott by Steven Mott | Licensed since 2012
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This article was updated on: 10/21/2018

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Since Medicare prescription drug coverage is optional, some people may decide not to sign up for a Medicare Prescription Drug Plan. But what happens if you need more prescription drugs as time goes on?

Is it true that Original Medicare has no prescription drug coverage?

Medicare Part A (hospital insurance) and Part B (medical insurance) make up Original Medicare, and may cover certain prescription drugs in specific cases only. For example, if you’re an inpatient in a hospital, Part A usually covers medications related to your treatment. Part B generally covers medically necessary prescription drugs administered to you in a clinic, doctor’s office, or other outpatient setting.

If you take prescription medications at home, you might want to consider signing up for a Medicare Prescription Drug Plan; read on to learn more.

How would I get a Medicare Prescription Drug Plan?

You can decide to skip prescription drug coverage, because it’s optional under Medicare – only you can decide if this is the right choice for you. But enrolling in a Medicare Prescription Drug Plan is usually easy to do.

Medicare Prescription Drug Plans are available under Medicare Part D from private insurance companies that contract with Medicare. You need to be enrolled in Medicare Part A and/or Part B to qualify for a stand-alone Medicare Part D Prescription Drug Plan, and live within the plan’s service area.

There’s another type of Medicare Prescription Drug Plan, and that is a Medicare Advantage Prescription Drug plan. There are several kinds of Medicare Advantage plans; all of them are available through private, Medicare-approved insurance companies. You can generally choose to receive your Medicare Part A and Part B benefits through a Medicare Advantage plan, and most plans include prescription drug coverage. Some plans also offer additional benefits, such as routine hearing benefits. If you enroll in a Medicare Advantage plan, you’re still in the Medicare program and still need to keep paying your Part B premium, along with any premium the plan may charge.

What if I don’t want to sign up for a prescription drug plan?

If you decide to have no prescription drug coverage, that’s up to you because it’s not required. However, you should be aware that if you ever do decide to enroll in a Medicare Prescription Drug Plan, you might face a Part D late-enrollment period.

If I have no Medicare Prescription Drug Plan, will the Part D late-enrollment period affect me?

If you decided to skip Medicare prescription drug coverage when you were first eligible for it, and then decided to sign up for a Medicare Prescription Drug Plan, it’s possible that you’ll face the Part D late-enrollment penalty.

If you’ve gone more than 63 days in a row without creditable prescription drug coverage since you were first eligible for Medicare, that’s when the penalty might apply to you if you sign up for a Medicare Prescription Drug Plan. Medicare considers coverage “creditable” if it pays, on average, at least as much as standard Medicare prescription drug coverage.

How does Medicare figure the Part D late-enrollment penalty? It’s 1% of the national base premium times the number of months you’ve been without creditable coverage. The national base premium can vary year to year; it’s $35.02 in 2018. That amount is rounded off to the nearest ten cents ($.10) and multiplied by the number of months you went without creditable prescription drug coverage after your Medicare Initial Enrollment Period ended.

So, for example, say you were first eligible for Medicare in May of 2013, and your Initial Enrollment Period ended August 31, 2013. You decided not to enroll in a Medicare Prescription Drug Plan, and you didn’t get this benefit from any other source (such as an employment-based group plan). Along comes December of 2018, and you now have a health condition that your doctor recommends managing with prescription drugs. You decide to sign up for a Medicare Prescription Drug Plan.

In this scenario, you’ve gone 63 full months without a Medicare Prescription Drug Plan or any creditable prescription drug coverage. Here’s how you figure out the possible penalty:

  • Take 1% of $35.02 ($.3502)
  • Multiply by 63 months. $.3502 * 63 = $22.06
  • Round to the nearest ten cents = $22.10

The penalty of $22.10 may be added to your Part D premium for as long as you’re enrolled in a Medicare Prescription Drug Plan.

How can I avoid the Medicare Part D late-enrollment penalty?

Here are some ways you might avoid the Part D late-enrollment penalty:

  • Sign up for a Medicare Prescription Drug Plan as soon as you’re eligible for Medicare. It may be tempting to go without this coverage if you’re healthy and you don’t take any prescriptions. However, as you’ve seen from the example above, this could cost you money in the long run.
  • Don’t sign up for a Medicare Prescription Drug Plan at all. This might save you money, but it’s somewhat of a risk, since you’ll be getting older and you may someday need prescription medications to treat an illness.
  • Make sure you don’t go more than 63 days in a row without creditable prescription drug coverage before you sign up for a Medicare Prescription Drug Plan. For example, you might have been covered by a group plan (based on your job or your spouse’s job, or a union) that you were able to keep when you first enrolled in Medicare. If the plan has creditable coverage, you may want to keep it until coverage ends or until you decide to enroll in a Medicare Prescription Drug Plan.

Please note that if you qualify for Extra Help (a program that may help pay Medicare Part D out-of-pocket costs for Medicare beneficiaries with limited incomes), you may not have to pay a Part D penalty.

Are you thinking about signing up for a Medicare Prescription Drug Plan, and would like some help finding an affordable plan that may cover your prescriptions? I’d be happy to assist you. You can start by using the links below, next to my photo, to set up a phone appointment or have me email you some personalized recommendations. Or, if you’d like to see some options now, use the Find Plans or Compare Plans buttons to begin comparing plans in your zip code.

Benefits and/or copayments/co-insurance may change on January 1 of each year.

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