| As noted in another area, mathematically, if a Medicare participant spends as little as $68.00 on prescription drugs per month, then a Medicare Part D plan with a monthly premium of $35.00 would break-even. Premiums under $35.00 or expenditures higher than $68.00 per month would save you money. Once again, as more information becomes available, each person must consider his or her own personal situation and whether a Medicare Part D plan makes sense. |
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Additional Costs of the Premium PenaltyAlthough, there are still a few open questions surrounding the monthly premium penalty, let us focus for a few minutes on two factors that (based on the annual Open Enrollment period information) could be theoretically effected by late enrollment:
1. The total Amount of the Premium Penalty
2. When Your Medicare Part D Coverage Begins
For purposes of explanation, let us use an example/fictitious Medicare Part D beneficiary: "Thomas" who is currently eligible for the Medicare Part D plans and does not have any other creditable prescription drug coverage.
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- The Amount of the Premium Penalty. Although it still is not 100% clear, it appears that if our Medicare beneficiary Thomas (who does not fall within one of several special classes defined by CMS) waits until after the May 15, 2006 Open Enrollment deadline, he may be subject to a minimum of a 6% premium penalty because the next annual Open Enrollment period (or Annual Coordinated Election Period) does not begin until November 15, 2006 and runs until December 31, 2006. Therefore, according to some sources, after the May 15, 2006 deadline, Thomas cannot enroll in a Medicare Part D program until Open Enrollment begins again on November 15, 2006.
- When Your Medicare Part D Coverage Begins. In addition to the increased premium penalty, it is possible that if Thomas waits until after May 15, 2006, not only will he be subject to several months of the 1% monthly premium penalty, but in theory Thomas also may not receive any Medicare Part D coverage before January 1, 2007.
As noted above, it appears from the existing guidelines that if a Medicare Beneficiary misses the end of the Open Enrollment period (May 15, 2006) then someone like Thomas may not be able to enroll in a new plan until the start of next annual Open Enrollment period (starting November 15, 2006). Further, although enrollment on November 15, 2006 halts the 1% premium penalty, it appears as though the newly selected plan will not take effect until January 1 of the next year (in this case 2007). In other words, if a Medicare beneficiary waits until after May 15, 2006 to enroll in a Medicare Part D plan, they may not be able to receive Medicare Part D coverage until January 1, 2007.
In Summary - If our assumptions are correct, then our example Medicare beneficiary Thomas could not apply for Medicare Part D coverage on, for example, June 15, 2006 and expect to receive immediate Medicare Part D coverage with only a 1% Premium Penalty. Instead, it is more likely that he would expect a minimum of a 6% Premium Penalty and his Medicare Part D coverage would not begin until January 1, 2007.
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