Mid-Atlantic Health Law TOPICS

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Medicare Part D-Join Now or Pay Later

Medicare Part D - Medicare's first prescription drug program-became effective on January 1, 2006. The benefit is available to anyone who is eligible for Medicare. No one can be denied for age, health or income reasons. The initial enrollment period began on November 15, 2005, and will end on May 15, 2006.
Coverage is not automatic. Nor is it mandatory or free. However, if you are eligible, do not have other "creditable coverage," and enroll after May 15, 2006, then you will pay a higher monthly premium forever.
A. The Penalty
The penalty for not enrolling by May 15, 2006, is 1% of the premium for each month that you wait to join. This rule was designed to encourage people to enroll at the beginning of the program rather than wait to join when their health problems develop and their drug costs rise.
For example, if a healthy 72-year old who has no prescription drug coverage decides not to join a Medicare prescription drug plan in 2006, but changes her mind two years later, when her health deteriorates, her premiums will be about 24% higher (1 percent per month times 24 months) and those premiums will remain higher for as long as she stays in a Medicare Part D plan. Instead of paying about $390 per year, she will pay around $485 a year. On the other hand, if she waits 6 years to join, her premium will be about 72% higher.
B. Creditable Coverage
The penalty does not apply, however, if a person has creditable coverage. Creditable coverage is prescription drug coverage that is, on average, at least as good as standard Medicare prescription drug coverage.
Examples of creditable coverage include coverage under the Veterans Administration and the Federal Employees Health Benefits Plan, and military coverage including TRICARE. Most employer and union provided prescription drug plans are also creditable coverage. All employers were required to notify Medicare eligible employees prior to November 15, 2005, if their prescription drug coverage was creditable.
For additional information about Medicare prescription drug coverage, including a list of prescription drug plans in your area, visit www.medicare.gov.