There is no question that the Medicare program and all of its parts can be extremely confusing and difficult to understand. There are open enrollment periods, parts A, B and D to consider and even riders that can be purchased at an additional cost. For a program that is intended to provide retired seniors with affordable medical coverage, it may be difficult to understand that not enrolling in a part of it may result in penalties.
Upon turning 65, individuals become eligible for Medicare. Part A Medicare is for hospitalization and Part B Medicare is considered medical. Neither parts, however, offer enrollees prescription drug coverage. The Medicare program offers Part D prescription drug coverage at an additional cost. For individuals on a fixed income or those that have no need for prescription coverage, purchasing a plan may seem unnecessary and somewhat silly. However, Medicare enrollees that opt out of purchasing these part D plans may be hit with a penalty later on.
Although it may sound scary, the late enrollment penalty should not be feared. The penalty's actual expense will depend on how long the Medicare enrollees were eligible to receive part D coverage and opted out of it. The penalty's value will be approximately 1 percent of the national average for every month enrollees go without it. For example, if the national average for part D prescription drug plan premiums is $20.00 a month, 1 percent would be $.20 per month or $2.40 for every 12 months that goes by without prescription drug coverage.
If Medicare enrollees are subject to a part D late enrollment penalty, the amount calculated will be added to the recipient's monthly premium upon enrollment in a qualified prescription drug plan. It is important to understand that not everyone will be subject to this late enrollment penalty. Individuals that have prescription coverage through a qualified part D or other prescription drug plan are exempt.
The Medicare program, however confusing, is a very helpful resource offered to retired seniors and the disabled. For help understanding this complex program, eligible individuals may benefit by speaking with an elder law attorney.