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The Premium Penalty Waiting Game

Should I just ignore the Premium Penalty and join a Medicare Part D plan when (and if) I ever need prescription drug coverage?


Medicare Part D Prescription Drug Plan enrollment is voluntary and some people we have spoken with simply do not wish to join. On one hand, if you never need prescription drug coverage, then you will save the unused insurance premiums. However, if you need prescription drug coverage in later years, you may pay quite a bit more per month on Part D plan premiums. The decision is purely personal.

Will the Premium Penalty go away?

The late enrollment Premium Penalty is a well debated topic and many people have taken a side of the discussions. After May 15, 2006 many people expected that the Premium Penalty would not be enforced and proposals were made to lift the Penalty for late enrollees. However, the Penalty Policy was not so easilly dismissed.

Again, what should a person do?
As mentioned earlier, the decision to join a Medicare Part D plan depends on each person's personal situation. If you have no need for prescription medications or you are satisfied with your HMO's plan, you may decide not to join a Medicare Part D plan and simply save yourself the monthly premiums. Or you may trust that the President or Congress will change their minds and elliminate the Penalty.

The challenge will arise if the government does not remove the Premium Penalty and you later require more prescription drugs and find it necessary to join a Medicare Part D plan at the "increased" premium level.

From the eMails that we have received from our Website users and Newsletter readers, many people are contemplating exactly this question: "Do I join a plan now or wait (save the premiums), and maybe join a plan later at a higher monthly cost, when I really need the plan?" Many of these people are already thinking of ways to avoud the Penalty, like purchasing medication from discount sources or outside the United States.

As noted in another area of our Website, mathematically, if a Medicare participant spends as little as $68.00 on prescription drugs per month, then a Medicare Part D plan with a monthly premium of $35.00 would break-even. Premiums under $35.00 or expenditures higher than $68.00 per month would save you money. Once again, as more information becomes available, each person must consider his or her own personal situation and whether a Medicare Part D plan makes sense.

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