When Should You Enroll in Medicare Part D? - dummies

When Should You Enroll in Medicare Part D?

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The “best” time to enroll in Medicare always depends on your circumstances. Check out your own situation on the following list to see how to avoid late penalties by choosing the most appropriate timing for Part D enrollment:

  • You don’t have creditable drug coverage: You need to sign up with a Part D drug plan during your seven-month initial enrollment period around age 65. In this case, the deadline is the last day of your IEP.

  • You have creditable drug coverage: You don’t need to enroll in a Part D drug plan. But if you lose this coverage in the future, you’ll be entitled to a special enrollment period of two months to enroll in a drug plan and avoid late penalties.

    Note that if you delayed Part B because of having health insurance from your or your spouse’s current employment, your SEP for enrolling in a Part D drug plan is much shorter — by six months — than the SEP for enrolling in Part B.

  • You’re living in a place where you can’t use Part D benefits — either outside the United States or in prison: You also get a special enrollment period on your return to this country or on your release. But the length of this SEP depends on your situation:

    • If you turned 65 during this period of absence, the month of your return or release counts as the fourth month of your seven-month IEP. So your deadline is the last day of the third month after the month you returned or were released.

    • If you turned 65 before you left the United States or went to prison, you get a SEP of two months after your return or release to enroll (or reenroll) in a Part D drug plan without penalty.

  • You have Medicare under age 65 because of disability: The rules according to any of the situations in this section also apply to you.

  • You sign up for Medicare in a general enrollment period (January 1 to March 31) because you missed your original sign-up deadline: You’re entitled to a SEP to sign up with a Part D plan to get drug coverage without waiting for open enrollment at the end of the year. This SEP runs from April 1 to June 30, and coverage begins July 1.

The law says that if you go for more than 63 days without Part D or other creditable coverage, you get a late penalty. So 63 days is often given as the length of the special enrollment period you can use to avoid a penalty. But that isn’t precisely accurate. Rather, you must be actually receiving Part D coverage within 63 days to avoid a penalty.

Say you lose your creditable coverage on March 31. Counting 63 days from that date brings you to June 2. If you leave it to the last minute and sign up with a Part D plan on June 1 or 2, you’re still within the 63-day time frame.

But you won’t avoid a late penalty because, under Part D rules, your drug coverage actually begins on the first day of the month after you enroll — in this example, July 1. You’re then penalized for one month without coverage. So think of the special enrollment period as being limited to two months rather than 63 days and you’ll be okay.