If I Don’t Enroll Into a Part D Plan, Will I Have To Pay a Penalty?

Medicare offers the opportunity to obtain prescription drug coverage to everybody who has Medicare. In applying for such coverage, however, there are some important criteria to keep in mind, because when you apply – as well as your circumstances related to other coverage that you may or may not have – could result in you being liable for a late enrollment penalty.

How Can You Obtain Medicare Prescription Drug Coverage?

There are actually two ways to obtain prescription drug coverage through Medicare. These include:

  • Medicare Part D – First, if you are covered by Medicare Parts A and B (Original Medicare), you can enroll in a stand-alone Medicare Part D prescription drug plan.
  • Medicare Advantage – If you are enrolled in Medicare Part C, or Medicare Advantage, you may also have prescription drug coverage already included in your plan.

It is important to note that each of these options will have plans that can vary in premium cost, as well as in the particular prescription drugs that are covered.

How Much Does Medicare’s Prescription Drug Coverage Cost?

The premium that you are charged for Medicare’s prescription drug coverage will typically vary from plan to plan. The factors that influence the cost include the drugs you need, the pharmacy that you use, and whether the prescriptions that you use are included on your prescription drug plan’s formulary (drug list).

When to Join, Change, or Drop a Medicare Prescription Drug Plan

Depending on your circumstances, there are different times when it may be right for you to initially join, as well as to change or to drop a Medicare prescription drug plan. For example, when you are initially eligible for Medicare Parts A and B, you can also sign up for a Medicare Part D plan. Typically, you must then stay enrolled in your plan throughout the calendar year.

This time period for initial enrollment includes the 7-month period of time that begins three months before the month in which you turn age 65. It includes the month of your birthday, and it ends three months after the month in which you turn 65.

Between October 15th and December 7th of each year, anybody is eligible to join, change, or drop a Medicare prescription drug plan – provided that they get their request for the enrollment or change in by the deadline date of December 7th.

Medicare also has special enrollment periods for those who qualify based on various situations. Some of these can include if you have:

  • Moved out of your current plan’s service area
  • Lost your current creditable prescription drug coverage
  • Qualified for Medicaid coverage
  • Moved to a skilled nursing home or other similar institution
  • Qualified for the Extra Help program

Things to Consider

Even if you do not currently take any prescription medications, it is a good idea to consider joining a Medicare drug plan. This is because if you do not join such a plan when you are initially eligible to do so – and you do not have other creditable prescription drug coverage – it is likely that you will be required to pay a late enrollment penalty if you join a prescription drug program at a later time.

Creditable prescription drug coverage is coverage that is expected to pay, on average, at least as much as Medicare’s standard drug coverage. This could be, for example, coverage that is from an employer or a union. Those who have this type of prescription drug coverage at the time they become eligible for Medicare may typically keep such coverage without being liable for a penalty should they opt to enroll in a Medicare prescription drug plan in the future.

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