The Part D penalty is the trickiest penalty in Medicare and can catch many people off guard... but not you!

After reading this article (or watching the video) you will live the rest of your life penalty free. 

Before we jump in let's alleviate some tension and learn about who won't receive a Part D penalty. 

Who Won’t Be Penalized for Part D?

Anyone who enrolls in a drug plan during the Initial Enrollment Period (IEP) will not be penalized. As a reminder, the initial enrollment period is for those who turn 65 and are no longer working (if you spouse is still working you may remain on her insurance). The IEP lasts for seven months--three months before you turn 65 and three months after your 65th birth month. If you enroll in a drug plan during the initial enrollment period you will not be penalized.

You also will avoid penalty if you enroll in a drug plan during the Special Enrollment Period (SEP). The special enrollment period is a short, two-month window that begins the day you retire. Anyone who was still working at 65 and didn’t enroll in Medicare can enroll in a drug plan during this two-month period and avoid penalty.

Who Will Be Penalized for Part D?

Perhaps you are reading this and thinking, "I'm super healthy and take no medications, why would I pay for a drug plan now?"

Well, the reason is to avoid a penalty. Anyone who neglects to pick up a drug plan when they initially enroll into Medicare will be penalized later when they pick one up. 

How much of a penalty are we talking?

Well, the penalty is three-fold and can last your entire life. 

What Are Part D Penalties?

1. Lifetime Penalties

The largest of the three penalties, if you don’t enroll in a drug plan at the right time, you'll have lifetime penalties added to your drug plan.

Here’s how it works: Every year you go without a plan, four dollars are added to your monthly premium. So if you go without drug coverage for three years, they're going to assess a $12 penalty every month to whatever drug plan you go with. If you go without drug coverage for five years, that's a $20 penalty added to your drug plan each month. The bad news is this penalty is for life, so you’ll be stuck paying these extra fees each month for the rest of your life. 

2. Narrow Enrollment Windows

The second penalty is that you cannot enroll in a drug plan any time you want. Medicare only allows you to enroll in a drug plan during the open enrollment season, which is October 15th through December 7th each year. When you pick up a drug plan during this open enrollment time, your coverage doesn't begin until January 1st. So if you didn’t enroll in a drug plan and something were to happen with your health after January, you would have to wait until the following year to get on a drug plan. 

3. Out-Of-Pocket Costs

The third Part D penalty is your out of pocket costs. If you fail to enroll when you get on Medicare and something happens to your health, even if you enroll during the open enrollment period (October 15th through December 7th), you still won’t be covered on that plan until January 1st. So any medications you need before January 1st will be paid for out of your own pocket. 

Conclusion

If you enroll in a Part D plan when you first go on Medicare (the initial enrollment period) or during the two-month period right after you retire (the special enrollment period) you won’t have to worry about paying Part D penalties. However, if you fail to enroll during these periods you could 1) could have lifetime penalties added to your monthly premiums. 2) have a limited time when you can enroll in a drug plan, 3) may be stuck paying for medications out of your own pocket.

Now that you know all about Drug Plan penalties you should have no problem living the rest of your life penalty free!

If you have any questions about Medicare penalties, drug plans, or anything Medicare our Medicare School Guides would love to help you. To set up a free appointment click here to find a time that works for you, or you can give us a call today at (800) 864-8890. 

 

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