Doughnut Hole Question: I just entered the Coverage Gap last month. Can I just drop my current Prescription Drug plan since there are no more benefits and then sign up again for 2008? I will not reach Catastrophic Coverage phase because I have already purchased enough medications for all of 2007.
Answer: First, Medicare Part D is a voluntary program. You are permitted to cancel your Medicare Part D plan, BUT please read further.
When you are without creditable Part D coverage for the remainder of 2007, you will incur the Premium Penalty (you pay an additional monthly premium based on 1% of the average monthly premium for each month that you are without Part D coverage).
Please note, Medicare rules allow you to be without coverage for 60 days before enrolling in a new Part D plan.
This CMS rule helps accommodate people who are moving to another state or Medicare Part D region and need to leave their old Part D plan because it is not available in their new state. In this situation, these Medicare Part D beneficiaries are granted a Special Enrollment Period (SEP) - because they are moving out of their Part D plan area and permitted to join a new Part D plan outside of the normal annual enrollment period (or Annual Election Period - AEP).
If you cancel your Part D plan when you are not granted a SEP, you will not be allowed to join or start a new Part D plan until the start of the next calendar year (this is what is termed "lock out").
It is true that you can join a new Part D plan during the next AEP, but your newly chosen Part D plan does not begin until January 1 of the next year.
So, if you cancel Part D coverage in July, you will pay at least an additional 5% premium penalty when you enroll in a new Medicare Part D plan and will continue to pay the penalty for the remainder of the time you have a Part D plan.
The amount of this penalty can increase year to year based on this average monthly premium figure (this year the average 2007 Part D premium is around $27.35 and is expected to increase each year).
In such a situation, most people may decide to stay with their Part D plans and avoid the permanent premium penalty.
You may wish to just consider the monthly Part D premium as normal insurance (like car insurance) – insurance coverage you have in case you need it, such as for unexpected medications.
(More on the Premium Penalty:
https://q1medicare.com/ PartD-Penalties-Beyond -Open-Enrollment.php