You decide whether to enroll in a Part D Plan.
There is a cost to you -- the monthly premium -- that you must pay if you decide to enroll in a Part D Plan. This premium provides you access to benefits if or when you need prescription drugs covered by your plan.
You pay a penalty if you wait to enroll
Let’s say you’re eligible for Medicare but decide you don’t really need prescription drug coverage right now. You’re healthy and don’t want to spend the money on premiums.
You may want to reconsider. If you wait to enroll, Medicare may charge you a late enrollment penalty if you are eligible for Medicare and are not covered by a plan providing creditable prescription drug coverage.
This penalty is equal to 1 percent of the national average premium for each month you are
- eligible for Medicare
- not covered by a creditable prescription drug plan, such as an employer plan, Veterans Administration (VA) or TRICARE
- not enrolled in a Part D plan after May 15, 2006.
You may pay this penalty for the rest of your life or as long as you are covered by a Part D Plan. As the national average premium changes from year to year, the dollar amount of your penalty also changes.
Avoid late enrollment penalty with creditable coverage
To avoid the late enrollment penalty, people eligible for Medicare must have creditable prescription drug coverage.
This means your coverage must be provided through a plan that expects to pay as much or more than Medicare’s standard prescription drug plan, such as
- a Medicare prescription drug plan
- an employer plan
- another source, such as the Veterans Administration (VA) or TRICARE
If you are eligible for Medicare and still working, you may be covered by your employer's plan.
Since January 1, 2006, all participants eligible for Medicare Part D -- retired or disabled employees, retired or disabled directors and their Medicare-eligible spouses, surviving spouses or dependent children -- are no longer covered by their co-op’s NRECA prescription drug coverage for active employees.
In order to avoid a late enrollment penalty, you must enroll in a Part D Plan -- from NRECA or another provider -- when you become eligible for Medicare. The period in which you may enroll without a penalty varies depending on why you are enrolling in a Part D Plan.
If you do not sign up for a Part D Plan when you are first eligible for Medicare prescription drug coverage, you may enroll during the open enrollment period each year. However, unless you had creditable prescription drug coverage, you may pay a penalty for the period of time that you were not covered.
NRECA checks for gaps in coverage when you enroll
When you enroll in a Part D Plan, your plan is required to tell Medicare if there was a period of time when you did not have creditable coverage. Medicare calculates your late enrollment penalty and tells your Part D Plan the amount to add to your monthly premium.
Your Part D Plan may send you a form asking you if you had creditable prescription drug coverage in the past and the dates you were covered.