Medicare Part D Penalties

Avoid Higher Costs with Medicare Part D

Medicare Part D is a crucial coverage that provides prescription drug benefits through private insurance companies. Unless you have VA benefits, it’s essential to enroll in Medicare Part D when you become eligible to avoid penalties and higher costs. In this blog, we will provide you with all the necessary information about Medicare Part D and the potential financial implications.

Standard Medicare Part D Premium

The premium for Medicare Part D plans can vary depending on the insurance company and the level of coverage you choose. The national average premium for Medicare Part D plans in 2023 is $32.74. However, in Minnesota, there are plans available with premiums as low as $4.00. If your medication needs are minimal, opting for a low-premium plan can help you maintain low costs while still receiving the necessary benefits. It’s important to review each plan’s formulary, which is the list of covered drugs, to ensure that your medications are included and available at your preferred pharmacy.

Higher Costs with Higher Income

However, there are situations where the Medicare Part D premium can increase beyond the advertised plan premium. This occurs when your income surpasses certain thresholds. If you are a  high-income earner, earning more than $97,000 as a single individual in 2023, you may be required to pay an additional amount for both your Medicare Part B and Part D premiums.

To learn more about penalties associated with Medicare Part B, we encourage you to read our dedicated blog on the topic.

It’s important to keep in mind that when determining Medicare costs based on income, the program looks back two years to assess your earnings. If you enroll in Medicare in 2023, your premium adjustment will consider your taxable income from 2021. For comprehensive information about Medicare and income considerations, please refer to our detailed blog by clicking here.

Denying Medicare at the age of 65

Another crucial factor to avoid penalties is enrolling in Medicare at the right time. During your Initial Enrollment Period, it is vital to sign up for Medicare to prevent penalties or being locked out of coverage. The penalty for late enrollment is calculated as 1% of the average national premium for each month you went without coverage. Although it may initially seem minimal, this penalty increases annually in line with the rising national average premium cost. However, if you or your spouse are currently employed and have active employer-provided health insurance, you may have the option to delay Medicare enrollment until your employer coverage is no longer available. To avoid penalties and lockouts, the health insurance you receive from your employer must be deemed “Creditable by Medicare,” meaning it offers coverage that is as good as or better than Medicare. Generally, if your employer has over 20 employees, the coverage is considered creditable. However, if your employer provides self-insured coverage, enrolling in Medicare at the age of 65 might be necessary.

Proof of Creditable Coverage

Fortunately, employers offering health insurance are required to provide you with information about creditable coverage each year. Typically, this information is mailed directly to your home by the health insurance plan around September. You can click here to see a sample of a creditable coverage notice. This notice will indicate whether you need to elect Medicare or if you can decline it based on your current health insurance coverage. Keeping a copy of this notice will be helpful for future Medicare enrollment, ensuring you can enroll penalty-free when you are ready.

You don't have to do this on your own

When navigating through the Medicare maze, know that you are not alone. Schatz Benefit Group has been assisting individuals like yourself for over 15 years. Their services are at no cost and will guide you each step of the way with the enrollment process. Call them today!