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Whether you qualify for Medicare by turning 65 years of age, through disability or by having a condition like Lou Gehrig’s disease, you may have the option to enroll into Medicare Part A and/or Part B. You also need to be an American citizen or permanent legal resident of at least five continuous years to qualify for Medicare.
Depending on your work history and how you qualify, you may be automatically enrolled or need to manually enroll. But one thing people often wonder about is how they obtain Medicare Part D, which is prescription drug coverage and doesn’t automatically come with Original Medicare.
Medicare Part D benefits are available from either a stand-alone Medicare Prescription Drug Plan or a Medicare Advantage Prescription Drug plan, which combines Original Medicare (Part A and Part B) benefits with prescription drug coverage. Both types of plans are administered by private insurance companies, and specific benefits and prices vary depending on the service area you live in.
You’re not required to enroll into a Medicare Part D Prescription Drug Plan. However, if you go without creditable prescription drug coverage for 63 or more days in a row after you’re first eligible, you may have to pay a late-enrollment penalty if you enroll into a Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan later.
Read below to find out more about what kinds of coverage can help you avoid this penalty, when you can enroll in a Medicare Part D Prescription Drug Plan or Medicare Advantage Prescription Drug plan, and other information regarding the late-enrollment penalty.
If you have health insurance in addition to Medicare, this might include creditable drug coverage. The plan must tell you each year whether or not the prescription drug coverage is creditable, meaning it covers at least as much, on average, as Medicare’s standard prescription drug coverage does. Some common examples of creditable coverage include (but are not limited to) health insurance from:
You can continue to use this prescription drug coverage alongside your Medicare benefits without penalty, as long as it’s creditable.
To enroll into a Medicare Part D Prescription Drug Plan, you need to have either Medicare Part A or Part B, and you have to live in the service area of the plan you choose. If you’re eligible for Medicare because of age, your seven-month Initial Enrollment Period for Part D usually takes place at the same time as your Initial Enrollment Period for Part B, starting three months before your 65th birthday, including your birthday month, and ending three months later. If you qualify for Medicare through disability, you’ll get a subsequent Initial Enrollment Period for Part D when you turn 65 years of age.
The Medicare Part D late-enrollment penalty may apply if you enroll any time after your Initial Enrollment Period for Part D and go without creditable prescription drug coverage for more than 63 days in a row. If you don’t enroll in Medicare Part D when you’re first eligible, your next opportunity will be during the Annual Election Period that occurs from October 15 to December 7 of every year. During this time, you can enroll into a stand-alone Medicare Prescription Drug Plan if you have Original Medicare or get drug coverage through a Medicare Advantage Prescription Drug plan. You can also use this period to switch plans or disenroll from your plan.
During the Medicare Advantage Open Enrollment Period (OEP), you may be able to make certain coverage changes. The OEP runs from January 1-March 31 each year.
Outside of these periods, you can’t make changes to your Medicare Part D coverage unless you qualify for a Special Election Period. Certain situations allow you to make changes outside of the regular periods and may include, but isn’t limited to, moving out of your plan’s service area, losing Medicaid eligibility, or moving into a nursing home.
If you’ve gone 63 consecutive days without creditable prescription drug coverage, either because you didn’t enroll when you were first eligible or because you lost your creditable coverage and didn’t get new coverage in time, then you may have to pay a late-enrollment penalty when you do enroll into Medicare Part D.
The Medicare Part D late-enrollment penalty is added to the premium of the Part D Prescription Drug Plan you enroll into. Your Medicare Prescription Drug Plan determines this penalty by first calculating the number of uncovered months you were eligible for Medicare Part D, but didn’t enroll under Part D or have creditable coverage. Your Medicare Prescription Drug Plan will then ask you if you had creditable prescription drug coverage during this time. If you didn’t have creditable drug coverage for 63 or more days in a row after you were first eligible, the Medicare Prescription Drug Plan must report the number of uncovered months to Medicare.
For example, let’s say you disenrolled from your Medicare Prescription Drug Plan effective February 28, 2019, and then decided to enroll into another Medicare Prescription Drug Plan during the Annual Election Period, with an effective date of January 1, 2020. This means you didn’t have creditable drug coverage from March 2019 through December 2019, which adds up to 10 uncovered months.
Currently, the late-enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.19 in 2019) times the number of full, uncovered months that you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. This number is then rounded to the nearest $.10 and added to your Medicare Prescription Drug Plan monthly premium cost. The “national base beneficiary premium” may increase each year, so the total of your late-enrollment penalty can also increase each year.
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