Medicare encourages everyone enrolled in Part A and/or Part B to also enroll in a Part D Prescription Drug Plan (PDP), even if you are not taking any medications. If you forego a PDP, and do not have other credible coverage like VA or employer prescription benefits, you could be subject to a late enrollment penalty when you eventually enroll in a Part D Plan.
How does Medicare apply the late Enrollment Penalty?
- After you become eligible, you may be subject to a penalty anytime you do not have a PDP or creditable coverage for a period of 63 or more consecutive days.
- Once you enroll in a PDP, your late enrollment penalty will be added to your monthly PDP premium.
- You will have to pay this monthly penalty fee as long as you have a PDP.
How does Medicare calculate the Late Enrollment Penalty?
Your penalty is based in the number of months that you were without a PDP or other credible prescription coverage. These numbers may change every year. For 2017:
- For every month that you do not have coverage you will be charged 1% of the national average for PDP premiums: $35.63, rounded to the nearest $.10.
- Example:
- Jake becomes eligible for a Part D Plan on January 1, 2017. He declines coverage because he had no medications
- Should Jake change his mind, he will now have to enroll during Medicare’s Annual Open Enrollment Period
- Jake decides to purchase a PDP during open enrollment of 2017 with a January 1, 2018 start date.
- This means that Jake will be without PDP coverage for 12 months
- 1% x 12 months = 12%
- 12% x 35.63 = 4.275
- Rounded to nearest $.10 = $4.30
- Medicare will charge Jake $4.30 every month in addition to his regular PDP premium, as long as he maintains a PDP
- So, if Jake enrolls in an $18 a month plan, he will actually have to pay $22.30 a month
What if I disagree with my penalty?
Medicare will perform a review of your penalty. Your PDP company will be able to provide you with a reconsideration request form.
While the Wooten Agency has no say over how these penalties are determined, we are always happy to help you choose a Prescription Drug Plan that will suit your medication and budget needs.
