How to AVOID the Medicare Part D Late Enrollment Penalty

How to avoid the medicare part d late enrollment penalty

Medicare offers prescription drug coverage known as Medicare Part D for an additional charge to everyone with Medicare. if you don’t use a lot of prescription drugs now you may still want to think about joining a Medicare drug plan to help protect against higher costs in the future. In this article, we will go over “How to avoid the Medicare Part D Late Enrollment Penalty“.

If you don’t join a Medicare drug plan when you’re first eligible for Medicare and you don’t have creditable prescription drug coverage you may have to pay a late enrollment penalty if you join later.

You don’t have to pay a penalty if you have and keep creditable prescription drug coverage or if you get “Extra Help” which is a program that helps people with limited income and resources pay for their prescriptions.

You’re probably wondering what Medicare means by creditable prescription drug coverage? Simply put creditable prescription drug coverage is drug coverage that’s expected to pay on average at least as much as Medicare standard prescription drug coverage.

Examples of creditable prescription drug coverage are:

  • Drug coverage from a current or former employer or union
  • Tricare
  • The Indian health service
  • Department of Veterans Affairs

If you have creditable prescription drug coverage when you first become eligible for Medicare generally you can keep it without paying the late enrollment penalty. If you sign up for Part D later the late enrollment penalty is added to your monthly Medicare Part D premium, and the amount depends on how long you went without creditable prescription drug coverage.

Here’s how it’s calculated:

  • Medicare multiplies 1% of something called the national base beneficiary premium.
  • Times the number of full uncovered months that you were eligible but didn’t join a prescription drug plan and that you didn’t have creditable prescription drug coverage.
  • The final amount then is rounded to the nearest $0.10 and it’s added to your monthly premium.

Here is an Example. In 2021 the National Base Beneficiary premium is $33.06. And let’s say you have been without creditable coverage for 24 months.

$36.06×0.24=$8.65 monthly penalty. Medicare rounds the amount to the nearest 10 cents so you will be charged your normal Part D monthly premium from the plan you choose + $8.70.

It is always recommended that you sign up for a plan as soon as you are able to. You can find extremely low cost plans that you can use to offset some of the charges you might have with your other plan. Or it might just give you a bigger network of pharmacies to choose from. 

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If you live in Pasco, Hernando, Citrus, Pinellas, Hillsborough, Polk or Sumter counties, you can schedule an in-person appointment with me to discuss your Medicare options. Give me a call at 813-842-1421 or Click Here or the picture below to schedule an appointment on our website. Thank you 

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