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Apply for Medicare Part D

Applying for Medicare Part D is simple. You contact a broker who specializes in Medicare insurance. Part D applications can be tricky with various election periods to choose from. You don’t want to get any of this wrong or your application can easily be rejected. The help of an agent is free and will save you time and hassle.

The Medicare Part D Late Enrollment Penalty

While technically Medicare Part D is voluntary, there are some very important reasons why you should seriously consider enrolling.

If you fail to enroll in Part D during your initial enrollment period (when you first become eligible), may result in a late penalty. The penalty is waived if you have had other other creditable coverage for prescription drugs, such as through an employer group health plan.  If not, then your penalty amount depends on how long you waited to enroll in a plan.

The penalty is calculated by Medicare as follows:  1% of the national average base Part D premium for every month that you went uncovered and did not have other creditable coverage. The penalty is rounded to the nearest $.10, and then added to the premium you pay for your new Part D premium.

The base premium is around $35, so if you had waited 50 months to enroll in Part D, you would have a penalty of 50% of $35 added to your chosen Part D plans’ premium. When you do finally enroll in Part D, you will pay the penalty for the rest of your life.

More importantly, if you miss your window, you cannot buy a drug plan mid-year without a special circumstance. Imagine if you develop a serious health condition in March and you need a very expensive medication for it. You would pay the full retail cost of that medication until the next Part D annual election period. This means you would have no coverage until January 1st. Remember that you are insuring your body here, which is more important than your car or your home. Consider the true risks of being uninsured.

Late Enrollment Scenarios

Sometimes it’s difficult for Medicare beneficiaries to understand how late enrollment will affect them. Here are a few examples to show you why you should consider joining a drug plan when you are first eligible.

How the late enrollment penalty is calculated

Mr. Brown became eligible for a Part D drug plan in September of 2015. She failed to enroll and had no other creditable drug coverage such as group benefits or VA coverage. Finally, during the annual election period, he enrolled in a Part D drug plan to be effective on January 1, 2017. Because he was uncovered for 16 months, Medicare will calculate a penalty for him. It would likely be something like this:

The penalty is then 16% for being uncovered 16 months. If the national average premium was $33.13 in 2017, his penalty is then approximately 33.13 x .16, or $5.30 cents added to the cost of whichever Part D plan he chooses. Mr. Brown will pay this monthly penalty on top of his drug plan premium for the rest of his life.

The risks of late enrollment

Mrs. Miller had been healthy all her life and, at the time of her Medicare eligibility, was taking no medications. Against the repeated advice of her insurance agent, she decided to gamble that her good health would continue. She decided not to enroll in a Medicare Part D plan.
Four years later, she was diagnosed with cancer in September, and was prescribed Gleevec, a specific oral cancer medication that falls under Medicare Part D. Her specific dosage had a retail medication rate of $5,600 per month.

Because she cannot enroll in a drug plan outside of the fall annual election period, Mrs. Miller had to pay the retail cost of her potentially life-saving medication for 4 months. Her total spending before her new drug plan began the following January was $22,400. (*This is a real-life example from an actual Boomer Benefits client.  The name has been changed to protect the client’s privacy.)

Before enrolling, learn more about what Part D covers and how the 4 stages of Part Dfunction. Lastly, be aware that insurance agents cannot solicit you for Medicare Part D plans. You must contact your agent and request to enroll before your enrollment period ends. Every year we see a few people who postpone Part D and miss their window, so be sure to set a reminder for yourself.

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