Delaying enrollment in Medicare Part D can have potential benefits, such as avoiding monthly premiums and cost-sharing expenses if you do not currently require prescription drug coverage. However, there may be significant costs associated with delaying enrollment, including the risk of facing higher out-of-pocket expenses if you develop a health condition requiring extensive medication treatment in the future, and the possibility of incurring a lifetime late enrollment penalty. As such, it is important to carefully weigh the pros and cons of delaying Medicare Part D coverage and to consider your personal health needs and financial situation when making this decision.

How Does Medicare Part D Work?

Prescription drug coverage is included in Medicare Part D, which is provided by private insurance companies contracted with Medicare. Medicare offers two types of plans that cover prescription drugs: Stand-alone Medicare Part D Prescription Drug Plans and Medicare Advantage Prescription Drug (MAPD) plans, which combine health and prescription drug coverage.

Enrolling in a Medicare plan that includes prescription drug coverage is optional, but the expense of prescription medications may be a compelling reason to enroll. If you delay enrollment, you may be subject to a late-enrollment penalty.

It is important to weigh the pros and cons of delaying Medicare Part D prescription drug coverage. Failure to enroll in a stand-alone Medicare Part D Prescription Drug Plan or Medicare Advantage Prescription Drug plan when first eligible for Medicare coverage could result in significant costs.

Prescription drug coverage under Medicare Part D usually involves out-of-pocket expenses, such as premiums, deductibles, and copayments/coinsurance. However, the expense of prescription medications can be exorbitant without drug coverage, particularly if you develop a health condition requiring extensive medication treatment. Any savings from not enrolling in a Medicare plan providing prescription drug coverage may be canceled out by out-of-pocket expenses.

For healthy beneficiaries who do not currently require medication, deciding whether to enroll in Part D coverage or delay coverage can be challenging. They must weigh the monthly premiums and cost-sharing expenses against the risk of waiting until they require prescription drug coverage and paying a late-enrollment penalty for the rest of their lives.

Are There Any Advantages of Delaying Medicare Part D?

If you already have prescription drug coverage that is considered creditable, meaning it is expected to pay at least the same as standard Medicare Part D coverage, enrolling in Medicare Part D may not be necessary. Examples of creditable coverage include group coverage through an employer or union, TRICARE, Veterans’ benefits, Federal employee benefits, and Marketplace health insurance.

Delaying enrollment in Medicare Part D may be a wise decision if you have creditable prescription drug coverage, as it can help you avoid paying an extra premium for coverage that you already have. In the event that you have prescription drug coverage through a group health plan provided by a current or former employer or union, you can enroll in a Medicare plan that provides prescription drug coverage up to eight months after your group coverage ends, using a Special Enrollment Period. In this scenario, you will not be subject to a late enrollment penalty.

What If I Miss My Part D Enrollment Period?

Delaying enrollment in a Medicare plan with prescription drug coverage can lead to significant costs for medications in case of illness or injury, and beneficiaries should be aware of the set time periods during which they can enroll. Waiting until the Annual Election Period may be necessary for those who missed their Initial Enrollment Period and will have to pay the full cost for all prescription drugs until then. Additionally, those who did not have creditable coverage for 63 consecutive days or more may face a late enrollment penalty added to their monthly Part D premium. While healthy beneficiaries may consider waiting until they need prescription drugs, it is generally safer to enroll in a Medicare plan with prescription drug coverage as soon as eligible. Eligibility requires having Medicare Part A and/or Part B and living in the service area of the desired plan.

Typically, the Medicare IEP and the Part D IEP coincide and span seven months, encompassing the three months prior to your 65th birthday, the month of your birthday, and the three months after. For instance, if you turn 65 in November, your IEP commences in August and concludes in February of the following year.

How To Calculate the Cost of Part D Late Enrollment Penalty?

If you decide to postpone your Part D enrollment for seven months and you don’t have creditable coverage, your monthly premium will increase by 7% for the duration of your Part D coverage, and this penalty cannot be reduced even if you enroll in a plan with a lower premium. For instance, if the national base beneficiary premium is $32.74 in 2023, your premium penalty will be $2.29 ($32.74 x 0.7 = $2.29) per month, which will be added to your plan’s premium. Keep in mind that this penalty always utilizes the national base beneficiary premium, and enrolling in a Part D plan with a lower premium will not lessen your penalty.

Should I Enroll in Medicare Part D?

Medicare Part D is an important aspect of healthcare, especially since prescription drugs can be needed unexpectedly. Even though there are other options available, such as charity care or alternate drug plans, they do not provide the same stability and protection as Medicare Part D plans. Furthermore, there are programs offered by the government that can help people with limited means pay for Part D coverage. There are situations where Medicare Part D may not be needed, such as if you have creditable coverage or a Medicare Advantage policy that already includes Part D coverage. If you are in the end stages of a life-threatening disease and under Medicare hospice care, Medicare Part A covers medications related to the terminal condition, but Part D coverage is needed for medications unrelated to the terminal condition. Also, high-income beneficiaries may need to pay an additional adjustment to their monthly Part D premium, but delaying enrollment due to this reason can lead to a lifelong penalty.

Medicare Health Advisor at Medigap Medicare Insurance | Website | + posts

Dr. Susan Johnson is a Medicare Health Advisor with extensive knowledge and experience in health insurance, particularly Medicare. She has spent over 15 years working in various healthcare settings, including hospitals, clinics, and private practices.

As a Medicare Health Advisor, Dr. Johnson specializes in helping people navigate the complex world of health insurance, including original Medicare, Medicare Advantage, Medicare supplements, and Medicare Part D. She is committed to providing personalized guidance to her clients, helping them make informed decisions about their coverage and reduce their healthcare costs.