Medicare can be confusing, but we’re here to help shine a light on it to help you make an informed decision. Making decisions about your health coverage can take some work, some research, and it can get tricky at times – that’s why we created this site – we’re here to help and to make the process as simple as possible.

Prescription drug coverage, in particular, can cause a lot of confusion during the research and the application process. Once you get it done, it’s well worth the effort, especially once you get some bills paid by your coverage and it starts to prove it self as being worthwhile, it’s a great feeling.

Sometimes, prescription drugs that someone needs can feel like they’re out of reach, and that’s never a good thing. If you’re in a perfect health and you don’t need any prescriptions, it can feel like a waste to pay for extra drug coverage at the time, but even if you decide against getting this coverage, it’s a good idea to put some cash away each month in the event that you get sick or you end up needing prescriptions. They can get quite costly.

Is Medicare Part D optional? 

Yes. Unlike Medicare Part A and Part B (which are mandatory if you plan to collect social security benefits when you turn 65), you are not required to enroll in a Medicare prescription drug plan (Part D). 

However, you are required to apply within your designated Initial Enrolment Period (IEP) or you will risk paying a late enrolment penalty on top of your monthly premium for the duration of your coverage. 

How to calculate the late enrolment penalty

The late enrolment penalty is calculated by multiplying 1% of the National Base Beneficiary Premium ($32.74 as of 2020) times the number of full, uncovered months you went without Medicare Part D or creditable prescription drug coverage. This is rounded up to the nearest $0.10 and will be added to your monthly premium.

Example: If you were uninsured for 21 months you would pay a late enrolment fee of $6.90 each month. (0.3274 x 21 = 6.87 rounded up to $6.90) 

What if I have prescription drug coverage already? 

To avoid a late enrolment penalty, Medicare requires that you have creditable prescription drug coverage. To be considered creditable, the plan must offer similar (or better) coverage as a standard Medicare prescription drug plan. Common sources of creditable prescription drug plans are:

  • Employer group coverage or union plans
  • Indian Health Service (IHS)
  • TRICARE
  • United States Department of Veterans Affair (VA)

If your coverage ends and you’d like to make the switch to a Medicare Part D prescription drug plan, you need to enroll within 63 days (the sooner the better!) otherwise you will be stuck with a late enrolment penalty. 

Medicare might ask for verification if you are switching from a creditable prescription drug plan, so it’s a good idea to keep important documentation from your plan provider. 

Can I get a Medicare Advantage plan instead? 

Yes. Medicare Advantage (Part C) plans are private, Medicare-approved plans that combine Part A and Part B and typically include other benefits like a prescription drug plan. 

You may choose to enroll in a Medicare Advantage plan during your Initial Enrolment Period or you can make the switch during the Medicare Advantage Open Enrolment Period that runs from January 1 to March 31 of every year.

You’ll want to shop around for a Medicare Advantage plan because they can vary in what they cover, how much they cost, and so on. The Part A and Part B aspects of these plans will be the same, but it’s the other extra benefits like prescription drugs that can set one plan apart from another.