Sign up as soon as first eligible
KNIGHT RIDDER NEWSPAPERS
Q. I am thinking of waiting a few years before I sign up for a Medicare prescription drug plan. I am on Medicare, without prescription drug coverage, and don't want to pay a new monthly premium if I can avoid it. But, I was told I will have to pay more in the future if I don't sign up by May 15, 2006. Is this true? -- Tom
A. Enrollment in a Medicare prescription drug plan is "voluntary," but you may be required to pay higher premiums if you don't sign up when you are first eligible. This is because the law includes a financial penalty for late enrollment.
In general, people on Medicare are expected to sign up when they are first eligible for prescription drug coverage under Medicare -- which for 2006 is between Nov. 15 and May 15. If you have drug coverage under another plan that is at least as generous as the standard Medicare drug benefit, you can wait to sign up for a drug plan without having to pay a penalty in the future.
However, if you don't enroll when you are first eligible and you don't have drug coverage from another source, such as an employer plan, Medicare will charge a 1 percent premium penalty for every month you wait to sign up. This premium penalty would increase the cost of your Medicare prescription drug coverage permanently.
Here is how it is expected to work:
UIf you don't sign up for 2006, but enroll in 2007, you delayed enrollment for 7 months after the enrollment period ends on May 15, 2006. If the average premium for 2007 is $41/month, you would pay your premium plus 7 percent of $41, or an additional $2.87 per month. In future years, your monthly premiums would be increased by 7 percent of the average monthly premium that year.
UIf you don't sign up until 2008, you would face a 19 percent premium penalty (a 7- month delay in 2006 and a 12-month delay in 2007). If the average premium in 2008 is $44/month, then the premium penalty would be 19 percent of $44 or another $8.36 per month, which is an additional $100 more that year.
As you can see, the premiums for Medicare prescription drug plans can rise pretty quickly if you delay enrollment, so it is important to make this decision with care.
XThis column was prepared by the Kaiser Family Foundation, an independent, nonprofit private foundation based in Menlo Park, Calif., not affiliated with the Kaiser Permanente health plan. Send questions about the new Medicare drug benefit to Medicare Q & amp; A, The Kaiser Family Foundation, 1330 G St., NW, Washington, DC 20005 or MedicareQ(AT)kff.org.