17 Oct Why Buy Medicare Part D Prescription Drug Plan?
Why Buy Medicare Part D Prescription Drug Plan?
Every year someone asks me why they should buy the Medicare Part D Prescription Drug Plan, especially if they do not take drugs. It really seems like a good idea to just save the money and wait until you do need to take drugs rather than buy coverage for something you don’t need?
In 2006 the Centers for Medicare Services or CMS decided the cost of prescription drugs was hindering the lives of Medicare recipients. This is when Part D or prescription drug insurance was added as a coverage to Medicare Advantage Plans. Now those who have creditable prescription drug plans elsewhere such as the VA or Tricare do not have to purchase an additional plan. So how could CMS incentivize healthily people to sign up for Part D when they do not take prescription drugs? They created a penalty.
Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” (35.02 in 2018; 33.19 in 2019) times the number of full uncovered months you did not have Part D Drug coverage.
Let’s use my dad as an example:
Let’s say he turned 65 in 2006. But he did not buy prescription drug coverage until 2015. That would equal 9 years without coverage.
9 x 12 = 108 months without Part D.
1.08 (108% penalty, 1% for each of the 108 months) x 33.19 = $35.84 Part D Penalty.
$35.84 rounded to the nearest $0.10 = $35.80
$35.80 = Monthly late enrollment penalty
In this case he will be paying $38.80 each month in addition to his plan’s premium. Most Medicare Part D premiums run about $30.00 a month. That’s $68.50 a month! He has been paying the late enrollment penalty since 2015 so it will be 4 years in January.
4 x 12 = 48
48 months x $35.80 penalty = $1718.40 he paid extra for the same service.
Medicare will charge him the penalty every year until the day he dies. The penalty or the national base beneficiary premium can go up or down every year. But he will be paying that $35.00 plus or minus for as long as he has Part D coverage and is using drugs. In this point in his life he will be using drugs for the rest of his life.
The moral to my story is go ahead and buy the Medicare Part D coverage when you are eligible even if you do not use drugs today. The chances are you will be using drugs as you age. None of us know the future and we do not know when we may need to use an expensive drug. But when the Doctor prescribes that drug, we sure do want to be able to get it and not have to pay full price.
One of my Dad’s prescriptions this month costs $5,000.00 a month and he would not be able to afford it without the Medicare Part D Drug plan.
Medicare Annual Election Period starts October 15th and Ends December 7th.
Have a great day