Did you know you can be penalized for delaying your Medicare Part D enrollment? You can! Of all the Medicare penalties, this is the one we see most often. Medicare Part D offers prescription drug coverage for Medicare beneficiaries. People who aren’t taking any medications often forgo Part D enrollment since they don’t need prescription coverage. Unfortunately, this leads to a lifetime of extra costs. How much is the Medicare Part D penalty? Let’s find out.
Late Enrollment Penalty for Medicare Part D
Part D late enrollment penalties are based on the length of time you went without coverage, as well as the current national base beneficiary premium. You are penalized for every month you are not enrolled in Part D, starting after 63 days of non-coverage. The calculation is as follows:
1% x national base beneficiary premium x number of months without coverage
The national base beneficiary premium changes each year, but it’s currently set at $34.70. This premium usually increases every year, so your penalty will also usually go up. Let’s look at an example.
Sally became eligible for Medicare when she turned 65, but she did not enroll in Part D. She finally decided to enroll three years (36 months) later. Her penalty calculation is:
1% x $34.70 x 36 = $12.50
Sally now has to pay $12.50 on top of whatever her Part D premium is. The penalty fee is paid to the Centers for Medicare and Medicaid Services (CMS), not the plan carrier.
At first glance, that may not seem like much money. And sometimes, it’s not. However, the Part D penalty lasts for as long as you are enrolled in a Part D plan. Presumably, then, for the rest of your life. And remember, it’ll likely get a little higher every year. This can certainly add up over time, especially if you went for an extended period of time without coverage.
What about if you enroll in a Medicare Advantage plan with Part D coverage included? You still pay the penalty. Many Medicare Advantage plans have prescription coverage built into the plan, thereby making the need to enroll in a separate Part D plan unnecessary. The penalty will still apply once you enroll in that kind of coverage – you can’t avoid it by enrolling in a Medicare Advantage plan with Part D inside the plan.
Avoiding the Part D Penalty
It is possible to avoid the Part D penalty, even if you decide not to enroll in Medicare as soon as you turn 65.
Many people are choosing to stay employed long after becoming eligible for Medicare when they turn 65. If you or your spouse are enrolled in an employer-sponsored group health insurance plan, you can postpone Medicare enrollment for as long as you’d like without incurring any penalties. However, the group plan must qualify as “creditable” in the eyes of the Medicare program. A good rule of thumb is that if your employer has at least 20 employees, the plan is creditable. Be sure to check with your HR director or carrier to find out if your plan is creditable before deciding to delay your enrollment.
VA Healthcare and TRICARE for Life are also forms of creditable coverage. Plus, both of these options offer excellent prescription drug benefits. Most of our clients choose to keep those benefits rather than enroll in a Part D plan.
If you qualify for the Extra Help program, you will not be responsible for any Part D late enrollment penalties. The Extra Help program is for beneficiaries with limited income and resources. It allows for assistance with Part D premiums, deductibles, and copays.
Enroll in Part D with Carolina Senior Benefits
Need help navigating the ins and outs of Medicare? Carolina Senior Benefits is here for you. Part D plans might just be the most confusing aspect of Medicare, and it’s smart to have a second set of eyes to make sure you enroll in the coverage that fits your needs. Call today to speak with one of our knowledgeable Medicare advisors.
