Part D Medicare penalty explained by Arizona Medicare Broker

Should I enroll now in Part D or Wait?

Quite often Medicare beneficiaries ask me why they should take out a Part D prescription drug plan when they don’t take any medications. At first glance that is a good question since the Part D plans carry a monthly premium and often times have a deductible.  In Arizona Medicare Plans, like most of the country, there is a wide range of premiums to choose from but they all have a premium

Well, when the Medicare plans were enacted they realized that this could become problem. If Medicare beneficiaries waited until they were taking medications on a regular to enroll in the plans it could make the program more expensive to administer. This is called adverse selection in insurance terminology. So they came up with a penalty for not enrolling when the recipient becomes eligible.

To figure the penalty there is a basic formula. The following is from the Medicare.gov web site.

“The late enrollment penalty is calculated by multiplying 1% of the "national base beneficiary premium" ($31.17 in 2013) times the number of full, uncovered months you were eligible but didn't join a Medicare Prescription Drug Plan 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 each year, so the penalty amount may also increase each year.”

It may very well be advisable to wait to enroll in a Part D plan until they need prescriptions, but on the other hand it may make the premium with the penalty too high to be practical. Its a person choice but then again insurance always is. Contact an Arizona Medicare Broker