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Medicare Part D — What Happens If You Don't Pay For Prescription Coverage?

It can be confusing making payments for Medicare's Part D section if you don't take prescription drugs. Jae Oh, author of "Maximize Your Medicare," explains why this actually makes sense and what can occur if you don't contribute.

It's aggravating paying for something that you may not think you need. Part D of Medicare provides prescription drug benefits on a stand-alone basis, and also refers to the drug benefits inside a Medicare Advantage plan. Why should you pay for it?

First of all, it's a requirement of Medicare. There are penalties associated with not paying for the Part D plan. 

For every month uncovered, there is a 1% penalty charged, unless you have “Creditable Coverage” as defined by the CMS. And that penalty is charged for as long as you're on Medicare - the rest of your life. In addition, if you decide to enroll in Part D after being uncovered, you will need to wait until the Annual Election Period (Oct 15 – Dec 7), and the plan would not take effect until the following January 1. 

It's important to be covered for any potential drug costs in case a medical emergency arises. Certain prescription drugs can be hundreds of dollars without coverage, so it's vital to keep your bases covered in case something happens. 

"People should understand how insurance works overall," says Jae Oh, author of "Maximize Your Medicare." 

"The people who are paying for insurance and don't file claims are actually funding those who do file claims," he says. 

Here's an illustration that simplifies how insurance works to make costs lower for the event in which one pay need medication:

Screenshot 2021-07-28 151251

Without policyholders paying premiums, the cost of insurance premiums could increase or the amount of coverage could decrease. 

In short, pay for Part D.