The vast majority of people eligible for Medicare are automatically enrolled into Parts A and B. If you are still working and not receiving Social Security you may need to sign up for these benefits. But Part D is different.
Part D is optional coverage. You are not required to enroll in a plan, but most people do. If you choose to sign up, you should do so during your Part D Initial Enrollment Period which generally lasts 7 months and includes the 3 months prior to the month you turn 65, the month you turn 65 and the 3 months after you turn 65.
But you may be wondering whether or not you should even sign up for Part D coverage. Maybe you should wait until a later date to sign up.
There are times when it makes sense to wait, but unless you have current creditable coverage there may be some unpleasant repercussions.
Delaying Part D enrollment
There are times when delaying Part D enrollment is the right choice. If you have creditable prescription drug coverage through your or a family member’s employer group insurance plan you may be able to delay Part D enrollment without penalty.
If your current coverage is part of your employer health benefits for example, it would not make much sense to pay for additional Part D coverage. Depending on the size of the company you work for it may make sense to delay your Part B benefits as well.
But, if you are enrolled in Parts A and B and have no creditable drug coverage, it may be prudent to enroll.
Here are the top reasons people don’t enroll when eligible:
- Don’t require prescription drugs
- Self insure
- Claim that premiums are unaffordable
If you do not enroll when you are first eligible you will be subject to a late enrollment penalty. Should you enroll at a later date beyond your Initial Enrollment Period or go more than 63 days in a row without coverage, your late enrollment penalty will continue for as long as you have Part D coverage.
Part D late enrollment penalty
The cost of the penalty depends on how long you go without coverage. The penalty is calculated by multiplying 1% of the national base beneficiary premium ($31.17 for 2013) times the full number of months you went without creditable coverage. This figure will be rounded to $0.10 and added to your monthly premium…. every month for as long as you have coverage!
Not only could this add up to a large sum over time but the risk of needing hundreds or thousands of dollars worth of prescription drugs prior to being covered is really not worth it. And the penalty amount can increase as premiums increase.
There are currently Part D plans available for about $15 per month. A small price to pay to potentially avoid a much larger penalty down the road. Someone once told me it was called insurance for a reason!