When Ed turned 65, we helped him select a traditional Medicare Supplement Plan. At the time, he decided to pass on purchasing Part D drug coverage. “I don’t take any prescriptions,” Ed explained. “I’ll sign up another day.”
We explained there would be a penalty for this decision – and how that penalty would be calculated – but Ed wasn’t convinced.
At age 70, Ed finally signed up for Part D. Here’s what happened.
Each year, CMS establishes a national base cost for Part D drug plans; this year, $34.10 per month. The penalty that will be added to whatever plan Ed bought, is equal to 1% of the cost of the base plan (34 cents) for every month (60) Ed was without coverage; that’s $20.40. The life expectancy of a 70 year old male is 14 years (168 months).
Ed’s penalty is likely to be in excess of $3,427.
BTW, Ed bought his Part D Plan from another agent. I’ll guess he didn’t want to chance hearing, “I told you so!”
(I wouldn’t do that.)