Medicare Drug Plans – Do I Really Need a Part D Plan?

“I take no prescription drugs. Do I really need a Medicare Part D prescription drug plan?”

This is a question I get asked a lot. People who take no prescriptions or maybe one or two generics cannot understand why they would need a Medicare Part D prescription drug plan. The reason is that the government requires it. Well, sort of. Although there is no penalty if you go the rest of your life without a Part D drug plan, there is a penalty if you decide to postpone your enrollment to when you actually need coverage. But there is another reason you might want to enroll now and not later. More on that later in this article.

2022 Medicare Part D Late Enrollment Penalty

When you are first eligible for Medicare Part B coverage (for most people this is when they turn 65), you have an Initial Enrollment Period (IEP). This Initial Enrollment Period (IEP) lasts for seven months. It starts 3 months before your first eligible month of Part B coverage. It includes the month of your Part B effective date and then lasts for the following three months. This is the period that you can enroll in a Part D plan.

Here is an excerpt from CMS about the penalty and how it applies to the IEP – “A person enrolled in a Medicare drug plan may owe a late enrollment penalty if he or she goes without Part D or other creditable prescription drug coverage for any continuous period of 63 days or more in a row after the end of his or her Initial Enrollment Period for Part D coverage.”

How To Calculate the Medicare Drug Plan Penalty

The amount of the penalty you would owe depends on how long you actually go without creditable coverage while you are eligible. To calculate this, Medicare will multiply the “National Base Beneficiary Premium” by 1% for each month of not having coverage. The National Base Beneficiary Premium is the average premium of all the available Medicare Part D prescription drug plans on the market.

For 2022, the national average premium is $32.74 per month.

For example, in 2022 if you have delayed your enrollment for 20 months, Medicare would multiply that number by 20% (20 months x 1% each month). They then round that number to the nearest $0.10. So in this case:

20% x $32.74 equals $6.58. We round that up to $6.60.

In our example of delaying your enrollment in a Medicare Part D drug plan for 20 months, that would mean that a penalty of $6.60 would be permanently added to your monthly premium once you enroll in a Part D plan down the road. If you never enroll in a plan, you would not have a penalty. But if your health situation changes and you need to start taking prescriptions at a later date, it could get quite costly to add the coverage later.

Another Reason to Enroll Now

In addition to avoiding the late enrollment penalty, there is another important reason to enroll when you are first eligible. Once you are out of your Initial Enrollment Period, you can only add or change your Medicare Part D drug coverage during a specific time period each year. The Annual Election Period (AEP) occurs every year from October 15 until December 7. Unless you have other special circumstances that come up during the year, the AEP is the only time you can change plans. Any changes during AEP go into effect on January 1 of the following Medicare Drug Plan Part D

If you had a change in your health in the spring of the year and needed prescriptions immediately while not enroll in a Part D plan, you would not be able to get prescription coverage until the following January. So any prescriptions that needed to be filled would not be covered until the next year. That could be a costly situation. Prescription drugs can run into the hundreds and the thousands for a one month supply of certain medications with no coverage.

Another factor that makes it worthwhile to enroll when you are first eligible is that there are many great Part D prescription drug plans available that cost less than $20 per month as of the writing of this article. Our health can change quickly. Is it worth taking a chance on needing the coverage and not having it when coverage is so inexpensive? That is a question that you have to take into consideration.

Find a  Drug Plan Online

You can find a Part D prescription drug plan with our plan finder tool. You can enter your current prescriptions and it will compare those against all the plans to see which one would cost you the least out of pocket.

The website address to shop the Part D drug plans is (click).

Contact us today a 1-888-228-6119 or fill out the form with your questions to take advantage of our free plan comparison service.

Keith Murray is an independent agent and the founder of Integrity Senior Solutions Inc. He has over 24 years of experience working with Seniors to meet their insurance and financial needs. The information on this page is for educational purposes.

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