If you do not enroll in the Medicare drug benefit (Part D) when you first become eligible and you choose to enroll at a later date, you may have to pay a premium penalty.
The premium penalty will be 1 percent for every month you delay enrollment (1 percent of the national base beneficiary premium). For example, the national base beneficiary premium in 2014 is $32.42 a month. If you delayed enrollment for seven months, your monthly premium penalty would be $2.26 ($32.42 x 1% = $0.3234 x 7 = $2.26), which will be added to your plan’s monthly premium.
If you have to pay the premium penalty, and you do not qualify for Extra Help, you will have to do so for as long as you are enrolled in the Medicare drug benefit. This penalty will increase every year, as the national base beneficiary premium increases.
In some specific circumstances you will not have to pay the premium penalty. You will not have to pay a premium penalty for late enrollment if:
- you already have prescription drug coverage at least as good as Medicare's ("creditable"). In order to avoid a premium penalty, you cannot have been without creditable drug coverage for more than 63 days. Speak with your insurer or your company's human resources department to find out if your current drug coverage is as good as Medicare's or better.
- If you qualify for Extra Help and enroll in a Medicare private drug plan.
- If you show that you received inadequate information about whether your drug coverage was creditable.