What happens if I don’t join a Medicare drug plan when I am first eligible?

In most cases, you will pay a late enrollment penalty if you don’t join when you are first eligible for Medicare, and you have been without creditable prescription drug coverage for 63 continuous days or more. Also, if you have a break of 63 continuous days or more in creditable prescription drug coverage at any time you are eligible for Medicare prescription drug coverage, you will have to pay a late enrollment penalty if you later join a Medicare drug plan.

How much is the late enrollment penalty?

The cost of the late enrollment penalty depends on how long you waited to join a Medicare drug plan. Your exact late enrollment penalty will be calculated when you join a Medicare drug plan. To estimate your penalty amount, multiply 1% of the national base beneficiary premium for the current year ($27.93 for 2008) by the number of full months you were eligible to join a Medicare drug plan but didn’t. Round this to the nearest 10 cents. This penalty amount is added each month to your Medicare drug plan’s premium for as long as you have the plan.

(Primary Source: Centers for Medicare and Medicaid Services - Your Guide to Medicare Prescription Drug Coverage 2008. This content may have been enhanced by Q1Group LLC to include further examples, explanations, and links.)

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