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Do I need a Prescription Plan when I'm first eligible for Medicare?

Its highly Recommended. When you decide to enroll into a prescription plan you will have a late enrollment period penalty. This penalty is based on all the previous months you've been without a plan. You will your late enrollment penalty is a LIFETIME penalty. This means you will pay this penalty each month for the rest of your life.


Medicare and You 2024 (Page 83-84)

What’s the Medicare drug coverage (Part D) late enrollment

penalty?

The late enrollment penalty is an amount that’s permanently added to your

Medicare drug coverage (Part D) premium. You may have to pay a late

enrollment penalty if you enroll at any time after your Initial Enrollment Period

is over and there’s a period of 63 or more days in a row when you don’t have

Medicare drug coverage or other creditable prescription drug coverage.

You’ll generally have to pay the penalty for as long as you have Medicare drug

coverage.

Note: If you get Extra Help, you don’t pay a late enrollment penalty.


There are 3 ways to avoid paying a penalty:

1. Get Medicare drug coverage (Part D) when you’re first eligible for it. Even

if you don’t take drugs now, you should consider joining a separate Medicare

drug plan or a Medicare Advantage Plan with drug coverage to avoid a

penalty. You may be able to find a plan that meets your needs with little to

no monthly premiums. Go to pages 10–14 to learn more about your choices.

2. Add Medicare drug coverage (Part D) if you lose other creditable

coverage. Creditable prescription drug coverage could include drug

coverage from a current or former employer or union, TRICARE, Indian

Health Service, the Department of Veterans Affairs, or individual

health insurance coverage. Your plan must tell you each year if your

non-Medicare drug coverage is creditable coverage. If you go 63 days

or more in a row without Medicare drug coverage or other creditable

prescription drug coverage, you may have to pay a penalty if you sign

up for Medicare drug coverage later.

3. Keep records showing when you had other creditable prescription drug

coverage, and tell your plan when they ask about it. If you don’t tell your

plan about your previous creditable prescription drug coverage, you may

have to pay a penalty for as long as you have Medicare drug coverage.

How much more will I pay for a late enrollment penalty?

The cost of the late enrollment penalty depends on how long you didn’t have

creditable prescription drug coverage. Currently, the late enrollment penalty is

calculated by multiplying 1% of the “national base beneficiary premium”

($32.74 in 2023) by the number of full, uncovered months that you were

eligible but didn’t have Medicare drug coverage (Part D) and went without

other creditable prescription drug coverage. The final amount is rounded to

the nearest $.10 and added to your monthly premium. The “national base

beneficiary premium” may increase or decrease each year. If that occurs, the

penalty amount may also increase or decrease. After you get Medicare drug

coverage, the plan will tell you if you owe a penalty and what your premium

will be.

Example:

Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment

Period ended on May 31, 2019. She doesn’t have prescription drug coverage

from any other source. She didn’t join by May 31, 2019, and instead joined

during the Open Enrollment Period that ended December 7, 2021. Her drug

coverage was effective January 1, 2022.

2022

Since Mrs. Martinez was without creditable prescription drug coverage from

June 2019–December 2021, her penalty in 2022 was 31% (1% for each of the

31 months) of $33.37 (the national base beneficiary premium for 2022) or

$10.34. Since the monthly penalty is always rounded to the nearest $0.10,

she paid $10.30 each month in addition to her plan’s monthly premium.

Here’s the math:

.31 (31% penalty) × $33.37 (2022 base beneficiary premium) = $10.34

$10.34 rounded to the nearest $0.10 = $10.30

$10.30 = Mrs. Martinez’s monthly late enrollment penalty for 2022

SECTION 6: Medicare drug coverage (Part D)85

2023

In 2023, Medicare recalculated Mrs. Martinez’s penalty using the 2023 base

beneficiary premium ($32.74). So, Mrs. Martinez’s new monthly penalty

in 2023 is 31% of $32.74, or $10.14 each month. Since the monthly penalty

is always rounded to the nearest $0.10, she pays $10.10 each month in

addition to her plan’s monthly premium.

Here’s the math:

.31 (31% penalty) × $32.74 (2023 base beneficiary premium) = $10.14

$10.14 rounded to the nearest $0.10 = $10.10

$10.10 = Mrs. Martinez’s monthly late enrollment penalty for 2023

What if I don’t agree with the late enrollment penalty?

Your Medicare drug plan or Medicare Advantage Plan with drug coverage

will send you a letter stating you have to pay a late enrollment penalty.

If you disagree with your penalty, you can request a review (generally

within 60 days from the date on the letter). Fill out the “reconsideration

request form” you get with your letter by the date listed in the letter. You

can provide proof that supports your case, like information about previous

creditable prescription drug coverage. If you need help, call your plan.


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