What Happens if I Don't Have Prescription Drug Coverage?

You are certainly within your right (so far) not to add prescription drug coverage to your Medicare. Unlike Medigap plans where you may never be able to buy a plan if you don't purchase it during your Initial Enrollment Period, you will be able to purchase a prescription Drug Plan as long as you are enrolled in Medicare. Without a Medicare Prescription Drug Plan you will have to pay for all your drug costs not covered by Part A and Part B.

What is the Late Enrollment Penalty?

There is a penalty for not having creditable coverage that will be added to your premium over the lifespan of the plan when you do decide to purchase coverage. This penalty is currently figured by multiplying the "national base premium" by 1% for every full month you were able to join a Medicare Part D plan but didn't. This amount is then added to your monthly premium amount for the lifetime of the plan.

When Does the Late Enrollment Penalty Start?

The Late Enrollment Penalty starts 63 days after your Open Enrollment Period or 63 days after other creditable drug coverage has ended. Any drug coverage available to you through a retiree or employer plan counts as creditable coverage. Many times this coverage can continue for years making an additional Medicare Prescription Drug Plan redundant. Should this coverage end, you will have 60 days before and 63 days after coverage ends to purchase a Prescription Drug Plan.

Keep all documentation (including envelopes) related to your previous plan in case your new Medicare plan tries to tack on the Enrollment Penalty. Pay close attention to the amounts of your premiums for at least the first six months to make sure that they haven't inadvertently added the penalty to your plan. If they do, you can contest this with Medicare and the insurance company. As long as you have proof of prior creditable coverage you should be able to have the penalty removed.

Auntie Lou says, "Do the math. For some people the cost of the prescription drug premiums will be a lot higher than their yearly drug costs, for other people it will be lower."