Welcome to Medicare School Daily, where we help you understand Medicare, save money,
avoid mistakes, and above all else, get the most out of your Medicare benefits.
Today's topic is how to avoid Medicare Part D penalties.
Part D plans are called prescription drug plans.
As we go into Medicare, there are actually two ways in which we can get our drugs covered.
Our Part D plans,
Part of our package.
Number one, you can stay in what we call original Medicare.
Medicare is going to pay first.
This all has to do with inpatient/outpatient care.
Then we have a supplemental plan to fill in the gaps.
And when we decide to stay in this particular option, now we're going to have what we call
a separate or a stand-alone prescription drug plans.
In most zip codes today, they're anywhere from 20 to 30 different plans that are available
if you choose to stay in this particular system. So those are stand-alone plans.
The second way to get your prescriptions covered is to enroll into an advantage plan, and it
will include a prescription drug
plans, it's included as part of the package, is actually embedded.
And so whether we have an embedded plan or we have one that is separate, we can still
be subject to penalties if we do not enroll in one at the right time.
So the first group of people I want to deal with are those that will not be assessed a
penalty for their part D. So who won't get penalized for Part D?
Well, for those who take a Part D plan when they're first eligible to do so.
The first opportunity we have to get a D plan is if we start our Medicare benefits at
65, which means you're not working, your spouse is not working,
you don't have an employer-provided plan available to you, so you're going to go on Medicare
at 65.
And if you enroll into a drug plan during that time, which is called your initial enrollment
period, which lasts seven months, you will not be penalized.
Those seven months are three months before you turn 65, the month you turn 65, and three
months after.
So if we enroll into Medicare, get a Part D plan during those seven months, we will not be
penalized.
Now, the second group of people of those that if they get a Part D plan at retirement, which
means they didn't retire at 65, they stayed on a group plan and now they're 67 or 72 or
79, whatever age they retired.
And from the retirement date, now they have two months beyond that retirement date to
get enrolled in a prescription drug plan.
And so they'll get into that plan during those two months.
They also will not be penalized.
So that's who won't be penalized.
Now, let's talk about those who will be penalized for not getting a prescription drug plan during
their initial enrollment period or special enrollment period.
It is those who go without Part D plans.
They didn't enroll in the plan when they should have.
And the question is always, why would someone do this?
Well, there's a couple of different reasons.
Number one is because as people go into Medicare, if they're healthy and they take no medications,
they reason
well, why would I take a plan if I don't take any medications?
Well, folks, that's today.
But that could easily change in a couple of months.
You know, I have homeowner's insurance.
My home has never burned down.
But I'm not about to go without homeowner's insurance just because my home has never burned
down.
Because one day it could.
And I want the coverage.
And the same thing is true now.
You may be healthy and take no meds now, but that could easily change.
The second reason is because many times the medications that someone is taking when they
go on Medicare are cheaper cash than they would be if you had a plan.
And again, same thing applies.
That's the medication you're taking today.
You could be on a medication that's much more expensive.
In fact, I have clients right now that are on medications that are $7,000 every single
month. Now because they have a Part D plan,
those medications are a fraction of the costs.
But if they didn't have a part D plan, they'd be paying the full cost of those medications.
All right?
So just because they're cheap now, that does not mean it will always be that way.
And then thirdly is because they got bad advice. Typically from a rookie agent, someone who
finds out that you don't take medications may reason with you.
Don't worry about it and pick up one later.
Well, listen, you realize that you'll spend more on your health care costs on medications
than anything else now, statistically.
OK?
So medications can cost you a lot of money.
And so a lot of agents don't want to mess with drug plans because we don't make much
money on them.
They take a lot of time, a lot of servicing.
But drug plans are a very important part of your coverage.
And so don't listen to any advice if someone says you don't have to worry about a drug
plan.
That's terrible, terrible advice.
So lastly, let's address the issue of the penalties of going without Part D coverage.
Well, the first one is that you cannot enroll into a drug plan at any time.
Many people think that I'm healthy now I don’t want to get a drug plan and if something happens
in my health, then I'll pick up a drug plan and I'll just add it at that time.
Folks, nothing could be further from the truth.
You see, you cannot enroll just at any time.
In fact, Medicare says if you want to pick up a drug plan, you must do that only during
the open enrollment season, which is October 15th through December 7th of every year.
And when you pick up a drug plan during this time, that coverage doesn't begin until January 1.
So if something were to happen with your health after January and now you have to wait until
the following year, you would be out of pocket that entire time.
So you cannot pick up a drug plan just anytime that you want.
That's one of the penalties.
Number two, now you're responsible for the out-of-pocket cost until January 1, when that
new drug plan is effective.
And so you may be on a medication that's very expensive.
Like I said, we have folks right now on $7,000 a month medication. With a drug plan,
they pay a fraction of the costs, but without a drug plan, you'd be out of pocket that full
amount until your new coverage began.
And then lastly, you'll have lifetime penalties that will be assessed to your drug plan.
Every year you go without a plan they add 4 dollars a month to your premium.
OK, that's for every year.
So a $4 a month penalty.
So if I go without three years of drug coverage, they're going to assess a $12 a month penalty
to whatever drug plan that I have.
That's $12.
If I go without for five years, that's a 20 dollar penalty every month added to my drug
plan.
So if you're on a drug plan that retails for $30 every month, what are they gonna do?
They're going to add that penalty to it.
So again, if I've gone without for five years, they would add 20 dollars.
If I go without for three years, they're going to add twelve dollars a month.
So they're going to add it to the penalty.
And the bad news is that penalty is for life.
So that $20 penalty, that $12 penalty, that $4 penalty is gonna be added to your prescription
drug plan for the rest of your life.
So there are consequences that are painful when you go without a part D plan.