Enrolling in Part D During Your Initial Enrollment Period
When you are eligible for Medicare at age 65, you can enroll during what is called your Initial Enrollment Period (IEP). This begins three months prior to your 65th birthday, the month of, and the 3 months following, for a total of seven months.
During these seven months, you have the opportunity to enroll in Original Medicare (Parts A and B), Medicare Advantage (Part C), Medicare supplements (Medigap), and/or Part D.
Before you can enroll in any other additional plans, you must first sign up for both Parts A and B—they are both required for eligibility to the other options. During the IEP, you will not be penalized for late enrollment, so long as you do so before the end of those seven months.
Part D Late Enrollment Penalties
If you wait till after your IEP to enroll in Part D, you could be penalized. For every month you are eligible for Part D after your IEP, 1% of your monthly premium will permanently be added to your rate.
Medicare bases this increase on the national base beneficiary premium, which is $33.06 in 2021. So, say you waited to enroll in Part D till 12 months (one year) after your IEP has ended. For each month, you must calculate an additional percentage, for a total of a 12% increase.
To calculate this, you must multiply the decimal percentage (.12) by the established $33.06 base premium. The total dollar increase, then, would be roughly $3.97. When rounded to the nearest 10 cent, this would equal a $4 total addition to your premium a month.
Special Enrollment Period for Part D
Besides enrolling within your IEP, one of the most common (and easiest) ways to avoid this late penalty is to enroll in Part D with a Special Enrollment Period (SEP).
You must, however, meet certain requirements to be eligible for a SEP. If you are eligible for the Medicare Extra Help program, you automatically qualify to enroll using a SEP at any time. If you are unsure whether or not you qualify for Extra Help, you can review your tax return and contact the Social Security office.
You can also qualify for a Part D SEP if you have recently retired, or have received at least 24 months of Social Security Disability Benefits.