You’re not taking any prescriptions right now, so why should you waste money on a prescription drug plan (PDP)?

Or…maybe you just take one or two generic medications now that cost you $4 per month apiece at your local pharmacy. Heck, I even know that Meijer (a popular Midwest grocery store/pharmacy) will fill a one-month supply for a very common pill for diabetes (Metformin) and for cholesterol (Atorvastatin) for free!

Why should you spend more for the monthly premium just to have a prescription drug insurance plan than you would for the copays you currently spend on your drugs?

Here are 2 important reasons you should…


The Late Enrollment Penalty (LEP)

Once you’re eligible for Medicare, you’re required to have what’s considered “creditable coverage” for your prescriptions; if you don’t, you’ll pay the LEP if you ever do sign up for a Part D plan in the future.

Now, I know, this is just another example of “big brother” forcing you to do something that you should be able to choose, right? Well, that’s a discussion for another time and place.

So the way it works is that Medicare counts every month you don’t have “creditable coverage” after your Initial Enrollment Period ends, and multiplies that total number of months by 1%. So if you didn’t have coverage for 48 months, your penalty is 48%. Then, whatever your penalty percentage is gets multiplied by what’s called the “national base beneficiary premium” for Part D drug plans. This final number is the dollar amount you’ll owe every month you have Part D coverage.

Example:  Jackie decided not to get a Part D drug plan when she turned 65  and enrolled in Medicare in September of 2014 because she wasn't taking any prescriptions.  Later, in 2016 she decided to get a plan because her sister informed her of the LEP.

Penalty: Jackie's Initial Enrollment Period (IEP) was from June - December of 2014, centered around her September birth month.  When she signs up during the Annual Enrollment Period in 2016, her plan starts in January of 2017.  She's not had coverage then for 24 months after her IEP ended, so she'll have a 24% penalty, which is then multiplied by the national base beneficiary premium of $35.63 (in 2017).

Her penalty will be 24% x $35.63 = $8.60 (rounded to the nearest $0.10)

Keep in mind, if you do have coverage thru your (or your spouse’s) work plan, you’re probably off the hook. Each year, your employer plan is supposed to notify each person covered who is eligible for Medicare if their plan meets Medicare’s definition of “creditable coverage”. But, now let’s get back to those of you who are considering whether to sign up for a plan on your own or not.

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The second reason why you should sign up for a plan is…

New Drug Coverage Can Only Start on January 1st

Now there are a few exceptions to this rule. For certain situations (if you move to a new area, for example), you can qualify for a Special Enrollment Period where your drug plan can start sometime in the middle of the year. But for the vast majority of Medicare folks, if you want to start (or change to) a new Part D drug plan, you have to wait for January 1st.

Some of you out there are thinking “wait I thought I had to switch my plan during the annual enrollment period (AEP) sometime in October”? Well, yes that’s true. So the time period I’m referring to is this AEP, which lasts from October 15th – December 7th. When you sign up for a new plan, or change plans, during this time, it goes into effect January 1st. That’s why you have to wait for your coverage to start on January 1.

So why should this matter? If you’ve waited for years without coverage, what’s the difference if you wait for a few more months til the first of the year?

Well, if your doctor prescribes a brand name drug for you, then you’d be stuck paying the full cost of the drug for the rest of the year. Now, if it was a one-time prescription where you’d have to pay full price, it wouldn’t hurt that bad. But, if this new drug will now be a regular maintenance medication for you, you could easily spend a couple thousand dollars extra for the rest of that year.

Some of the most common expensive drugs that I’ve seen on a regular basis are:

  • Xarelto (heart) - $418 for 30 pills
  • Advair (lungs) - $153.90 for 14 inhalations
  • Lantus Solostar (insulin) - $402.06 for 15 milliliters

These prices are listed on

Keep in mind too that there are hundreds of other maintenance brand name drugs used to treat dozens of other health conditions. You just never know when something could change in your health, and the chances of that happening as you get older tend to be more likely.

Signing up for a Part D plan right away is tip #11 of my 31 ways to save money on Medicare. Interested in learning about the other 30? Get your copy of my FREE e-book "31 Ways To Save Money on Medicare"


The choice of whether or not to get Part D drug coverage is up to you. My job is to make sure you’ve got all the facts so you can make a well-educated decision. I just want to make sure you don’t skimp on coverage just to save a little bit of money every month initially, but then be stuck later on spending hundreds, or thousands, of extra dollars down the road.

Remember, people are living a lot longer these days. You should expect to spend about one-third of your life in retirement. Try to look at the long-term, big picture when making your Medicare decisions.