Sixty-Five Incorporated

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What if a Part D drug plan means you pay more for drugs?

A new Medicare beneficiary recently wrote to 65 Incorporated concerned about signing up for a Part D prescription drug plan. He wrote:

“I take only one prescribed medication that I can get for $4 through my drugstore’s special program. Why should I pay a $20 premium every month for a drug plan and a $10 copayment on this medication?”

This is a dilemma faced by many would-be Medicare beneficiaries who take only a few inexpensive medications. Because the premiums and out-of-pocket costs associated with a drug plan amount to more than they are paying now, they question the need to enroll in Part D. 

Let’s look at the facts.

  • Enrollment in a drug plan is optional
  • However, beneficiaries who do not have other creditable drug coverage will face a Part D penalty if and when they do enroll. (Creditable coverage means that the plan will pay, on average, at least as much as Medicare’s standard prescription drug coverage.) 
  • The Late Enrollment Penalty is 1 percent of the average annual base premium for every month a beneficiary did not have creditable coverage. In 2019, the monthly penalty is 31¢. An example: A beneficiary who delays enrollment in Part D for 18 months would pay an additional $5.58 every month for drug coverage. The penalty amount likely will change every year as Medicare adjusts the annual base premium. 
  • The penalty carries through for as long as the beneficiary has a Part D drug plan.
  • If Part D enrollment becomes necessary, the person may only enroll in a plan during the Medicare Open Enrollment Period between October 15 and December 7 of each year.  Coverage will then begin January 1 of the coming year.

Beneficiaries can choose to forego a drug plan but they must remember that health is not guaranteed. Unexpected illnesses or accidents can create a sudden need for costly medications. 

Our recommendation:
Before deciding not to enroll in a drug plan, think carefully about the potential cost savings of delayed enrollment versus the risks of not having coverage and the impact of the late enrollment penalty.

Last updated: 04-25-2019