Are you new to Medicare and considering delaying enrollment in Part D? Don't go anywhere – in this video, we explain how the Part D penalty works.

My name is Lindsay Engle, and I'm the Medicare Expert for Elite Insurance Partners and MedicareFAQ.com.

Part D works as prescription drug coverage alongside Parts A and B. The best time to enroll is when you're first eligible, during your Initial Enrollment Period.

Your Initial Enrollment Period begins three months before your 65th birthday. Will be the month of, and continues for three months after your 65th birthday. This gives you a seven-month window to enroll.

Like Parts A and B,  Part D comes with a late penalty if you delay enrolling without creditable coverage. If you don't have creditable coverage, you may qualify for a Special Election Period to eliminate this penalty.

This penalty works differently from the Original Medicare penalties. With Part D, you'll be charged a penalty equal to 1% of the national average premium for every month you delayed enrolling without creditable coverage.

You'll pay this penalty every month as long as you have Part D coverage. If you're penalized, you can appeal the penalty by submitting a reconsideration request. This is available on CMS's website.

For example, say you waited 33 months after your Initial Enrollment Period to enroll in a Part D plan. Unless you had creditable coverage or qualify for a Special Election Period, you'd be charged 1% of the national average Part D premium for each of those 33 months.

Currently, the average premium for Part D is $33.06. The penalty is calculated by multiplying $33.06 by 0.33 (33 months), which equals $10.90. The Part D penalty is rounded to the nearest 10 cents. Therefore, your Part D premium would be somewhere around $43.97. Your premium would continue to increase, as the average premium does each year.

Each Part D carrier sets its premium and drug formulary. Even if you think you don't need Part D prescription drug coverage right now, many different carriers offer these plans nationally. The monthly premiums start at around $15.

When choosing between paying the premium now and paying the penalty for the rest of your life, it makes more sense to enroll sooner. This way, you'll avoid the penalty.

Part D plans change annually. Each September, you'll receive an Annual Notice of Change letter that will go over your drug formulary and notify you of any premium increases.

During the fall Annual Enrollment Period from October 15 through December 7, you'll have the opportunity to compare other plans in your area and make sure you have the lowest premium available.

As has been noted, the best time to enroll in a Part D plan, and avoid penalties, is during your Initial Enrollment Period.

Part D: https://www.medicarefaq.com/original-medicare/medicare-parts/medicare-part-d/
Part D Late Enrollment Penalty: https://www.medicarefaq.com/faqs/medicare-part-d-late-enrollment-penalty/
Initial Enrollment Period: https://www.medicarefaq.com/faqs/medicare-initial-enrollment-period/
Special Election Period: https://www.medicarefaq.com/faqs/medicare-special-enrollment-periods/
Annual Enrollment Period/Open Enrollment Period: https://www.medicarefaq.com/faqs/fall-medicare-open-enrollment-period/

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