Often people enroll in a Part D prescription plan when they first become eligible for Medicare. Usually, the only reason not to enroll at that time is if you continue to work and/or have coverage through your employer. There is no penalty if you decide to continue working and enroll in Part D when your “credible coverage” ends.
However, sometimes people who are not taking any medications want to delay their Part D enrollment to save money on the Part D premium each month.
There is no rule that says you MUST enroll in Part D when you are first eligible but there will be a penalty if you do not.
How is the penalty calculated?
The Medicare Part D penalty is 1% of the Average National Medicare Part D cost multiplied by the number of months coverage is delayed. I know it sounds complicated but our Part D Penalty Calculator can easily help you determine the cost of waiting.
For example, let’s assume you were eligible in January 2015 but did not enroll until January 2017.
The penalty will be calculated as follows:
Months enrollment was delayed X 1% of $35.63 (Average Part D cost in 2017)
(24 X .3563) = $8.56
The additional $8.56 calculated above will be added to the monthly Part D plan premium going forward.... forever. The penalty will be added no matter which Part D prescription plan you enroll in.
So, if you choose a Part D plan that costs $30 per month, your total premium cost would be approximately $38.56 per month.
Only you can decide if the cost of waiting is worth it.
When should you enroll?
Typically, you are eligible to enroll in a Medicare Part D plan 3 months prior to starting Part A OR Part B of Medicare. Usually this occurs when you turn 65.
If you do not enroll during the initial period you are restricted to when you can enroll. Most of the time, it is at the end of each year during the annual enrollment period or when your credible coverage ends.
Not everyone will have a penalty, but if you choose not to enroll in Part D when you are first eligible, it's important to know the cost.
Related Post: How do I find the right Medicare Part D plan?
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