What happens if I don’t enroll in Medicare Part D?
Are there penalties for delaying enrollment in Medicare Part D prescription drug coverage?
Yes, if you delay enrolling in Medicare Part D prescription drug coverage and do not have other creditable prescription drug coverage (coverage as good as Medicare’s), you may face a late enrollment penalty. This penalty is added to your Part D premium, and it lasts for as long as you have Medicare prescription drug coverage.
Here’s how the penalty works:
1. How the Late Enrollment Penalty Is Calculated:
The penalty is based on the length of time you went without creditable prescription drug coverage. Specifically, you will pay an additional 1% of the “national base beneficiary premium” for every month you were eligible for Part D but didn’t enroll.
In 2024, the national base beneficiary premium is $34.70. So, for each month you delayed enrollment, you’ll pay an extra 1% of this amount.
Example: If you went 12 months without creditable prescription drug coverage, your penalty would be 12% of $34.70, which equals about $4.16. This amount is added to your monthly Part D premium.
Cumulative Penalty: The longer you delay enrolling, the higher your penalty will be, as the 1% is added for every month you go without coverage.
2. How Long the Penalty Lasts:
The late enrollment penalty lasts for as long as you have Medicare Part D or Medicare Advantage with prescription drug coverage. This means you will continue to pay the penalty on top of your Part D premium for life, unless you qualify for an exemption.
3. When to Enroll to Avoid the Penalty:
To avoid the penalty, you must enroll in a Medicare Part D plan during your Initial Enrollment Period (IEP), which is a 7-month period that begins 3 months before your 65th birthday, includes your birthday month, and ends 3 months after your birthday.
If you’re still working and have creditable prescription drug coverage through an employer or union plan, you can delay Part D enrollment without facing a penalty. However, once that coverage ends, you’ll have a Special Enrollment Period of 2 months to enroll in Part D without incurring a penalty.
4. Creditable Coverage:
Creditable coverage means that your existing prescription drug coverage is at least as good as what Medicare Part D offers. If you have creditable coverage through an employer, union, or another source, you will not be penalized for delaying Part D enrollment.
Each year, your plan should notify you whether your coverage is considered creditable. Keep this notice, as you may need to provide proof if you delay Part D enrollment.
5. Extra Help Program:
If you qualify for the Extra Help program, which assists individuals with limited income and resources, you will not be subject to the late enrollment penalty.
Key Takeaways:
Delaying enrollment in Medicare Part D without creditable coverage will result in a late enrollment penalty.
The penalty is 1% of the national base beneficiary premium for every month you go without prescription drug coverage.
The penalty lasts for as long as you have Medicare Part D.
If you have any questions about Medicare Part D or need help enrolling to avoid penalties, you can schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
