Medicare Part D Penalty

As people approach Medicare age, many do not understand the lifetime penalty resulting from failure to purchase Part D Medicare Prescription Drug coverage. Medicare doesn't always remind people of this requirement.

In general, at and after age 65, going without a Medicare Part D Prescription Drug Plan or other creditable coverage for more than 63 days creates a lifetime monthly penalty of 1% for each month without creditable coverage multiplied by the Medicare base beneficiary premium.

Every year, employer group medical plans are required to notify individuals about whether their prescription coverage is creditable.

VA Healthcare from the Veterans Administration is Medicare-creditable prescription coverage. There is no premium charge for VA Healthcare, but VA requires the veteran to enroll to obtain coverage. While VA Healthcare is generally means tested, vets who served in Vietnam are likely eligible for coverage regardless of personal income. Check VA eligibility here.

Medicare.gov gives an example of how the penalty is calculated and how it can increase each year due to recalculation. Click here