What is Medicare Part D & Penalty? 

Medicare drug coverage (Part D) 

How does Medicare drug coverage work? Medicare drug coverage helps pay for prescription drugs you need. Even if you don’t take prescription drugs now, you should consider getting Medicare drug coverage. 

Medicare drug coverage is optional and is offered to everyone with Medicare. If you decide not to get it when you’re first eligible, and you don’t have other creditable prescription drug coverage (like drug coverage from an employer or union) or get Extra Help, you’ll likely pay a late enrollment penalty if you join a plan later. Generally, you’ll pay this penalty for as long as you have Medicare drug coverage (see pages 79–80). 

To get Medicare drug coverage, you must join a Medicare-approved plan that offers drug coverage. Each plan can vary in cost and specific drugs covered.  Visit Medicare.gov/plan-compare to find and compare plans in your area.  

There are 2 ways to get Medicare drug coverage: 

1. Medicare drug plans. These plans add drug coverage to Original Medicare, some Medicare Cost Plans, some Private Fee-for-Service plans, and Medical Savings Account plans.  You must have Part A and/or Part B to join a separate Medicare drug plan. 

2. Medicare Advantage Plans or other Medicare health plans with drug coverage.  You get all of your Part A, Part B, and drug coverage, through these plans. Remember, you must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage.  In either case, you must live in the service area of the plan you want to join. 

Both types of plans are called “Medicare drug coverage” in this handbook. 76 SECTION 6: Medicare drug coverage (Part D)

Part D late enrollment penalty

The late enrollment penalty is an amount that can be added to your Medicare drug coverage (Part D) premium. You may have to pay a late enrollment penalty if at any time after your Initial Enrollment Period is over, there's a period of 63 or more days in a row when you don't have Medicare drug coverage or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Medicare drug coverage. 

Learn how to avoid the late enrollment penalty.