Skipping Medicare Part D Now Might Cost You Much More Later

Key Takeaways

• Delaying Medicare Part D enrollment can result in permanent penalties and higher out-of-pocket drug costs.

• Even if you don’t take medications now, enrolling when you’re first eligible can safeguard against late penalties and gaps in coverage later.

Understanding What Medicare Part D Covers

Medicare Part D is prescription drug coverage. In 2025, it works alongside your other parts of Medicare—especially Original Medicare (Parts A and B) or a Medicare Advantage plan that doesn’t include drug benefits. While Medicare Parts A and B cover hospital and medical services, Part D is specifically designed to help with the costs of prescription medications, which can become significant as you age.

Coverage includes:

• Outpatient prescription medications

• Vaccines recommended by the CDC

• Insulin and diabetic supplies

• Certain cancer, antiviral, and immune-related drugs

Part D plans must follow standard coverage rules, but the list of covered drugs (known as a formulary), cost-sharing, and pharmacy networks can vary. That’s one reason Part D requires careful evaluation—especially if you’re thinking about skipping it.

Why Some People Skip Medicare Part D

It may seem reasonable to decline Part D at first—especially if you’re healthy, don’t take medications, or have temporary drug coverage through another source. But skipping enrollment during your Initial Enrollment Period (IEP) can create more problems than it solves.

Here are common reasons people delay:

• “I’m not taking any prescriptions now.”

• “I have discount cards or buy generics out-of-pocket.”

• “I’ll wait until I really need coverage.”

Unfortunately, this approach can backfire.

The Permanent Late Enrollment Penalty

Medicare imposes a Late Enrollment Penalty (LEP) for those who don’t sign up for Part D when first eligible and don’t have other creditable drug coverage (coverage at least as good as Medicare’s standard).

How the Penalty Works

• The penalty is 1% of the national base beneficiary premium for each full month you go without coverage.

• In 2025, the national base premium is $46.50. Even though plan premiums vary, the penalty is calculated using this figure.

• The penalty is added to your monthly premium for as long as you have Part D.

An Example Timeline

Let’s say your Initial Enrollment Period ended in December 2023. You delayed until January 2025—that’s 13 full months late. Your penalty would be:

1% x 13 = 13% 13% of $46.50 = $6.05 penalty per month

And that’s not just a one-time fee. It’s added to your premium permanently, even if your chosen plan charges a different monthly rate.

Creditable Coverage: The Only Way to Delay Without Penalty

To avoid the late penalty, you must have what Medicare considers creditable drug coverage. This includes drug coverage from:

• Employer or union plans (active employment only)

• TRICARE (for military retirees)

• The VA or Indian Health Service

• Some retiree or COBRA plans

Importantly, coverage must meet or exceed Medicare’s minimum standards. If you’re unsure, your plan should send a notice each year confirming if it qualifies as creditable. Save this notice.

If your creditable coverage ends, you’ll have 63 days to enroll in a Part D plan without facing a penalty.

Initial Enrollment Period: The First (and Best) Opportunity

Your Initial Enrollment Period (IEP) for Medicare begins three months before the month you turn 65 and lasts three months after. This is your ideal window to enroll in:

• Original Medicare (Parts A and B)

• A standalone Part D plan if you choose Original Medicare

• A Medicare Advantage plan with or without drug coverage

If you delay Part D and don’t have other creditable coverage, the LEP clock starts ticking the month after your IEP ends.

Special Enrollment Periods: Limited, Not Guaranteed

Special Enrollment Periods (SEPs) let you enroll outside your IEP without penalty, but they only apply in certain cases:

• You had creditable coverage and lost it

• You moved out of your plan’s service area

• Your plan terminated or changed significantly

• You qualify for Extra Help or Medicaid

These windows are typically 2 to 3 months long. Missing them means you’ll wait for the Annual Enrollment Period (AEP) and potentially pay a penalty.

Annual Enrollment Period: Your Fall Option

The Annual Enrollment Period (AEP) runs October 15 to December 7 each year. This is when you can:

• Join a Part D plan

• Switch Part D plans

• Drop drug coverage entirely

If you missed your IEP or SEP and have no creditable coverage, enrolling during AEP is your next opportunity—but you will incur the late enrollment penalty.

Coverage from AEP begins on January 1 of the following year.

The Real Cost of Delaying Coverage

Prescription drugs can be unpredictable. Even if you’re healthy now, your health—and medication needs—can change quickly. Here’s what to consider:

1. You May Pay More Later

Prescription drugs tend to get more expensive over time. Without coverage, even generic medications can put pressure on your budget. Skipping Part D now means facing higher monthly costs later—not just for drugs, but for the penalty, too.

2. You May Have to Wait for Coverage

If you miss your IEP and don’t qualify for a SEP, you’ll have to wait until AEP to sign up. That could mean months without drug coverage, during which you’ll pay full price for all prescriptions.

3. You Lock In the Penalty for Life

Unlike other Medicare penalties, the Part D penalty is lifelong. Once it applies, it’s permanently added to your monthly premium.

Medicare Changes in 2025 That Make Part D More Valuable

In 2025, Medicare Part D becomes more cost-effective for many beneficiaries due to changes enacted in recent years:

• $2,000 annual out-of-pocket cap: This limits how much you’ll pay for prescriptions annually, regardless of the drug.

• No more coverage gap (donut hole): The phase between initial coverage and catastrophic coverage is gone.

• Prescription Payment Plan option: Lets you spread out costs over the year rather than paying large sums up front.

These reforms make enrolling in Part D more beneficial than ever, especially for those managing chronic conditions.

Low-Income Assistance Can Eliminate or Reduce Penalties

If you qualify for Extra Help, you may:

• Pay no or reduced premiums and deductibles

• Face minimal or no copayments

• Avoid late enrollment penalties

Extra Help is available year-round and is based on income and resources. Even if you didn’t qualify in past years, it’s worth checking again annually.

How to Avoid Mistakes with Part D

Medicare rules can be confusing, but these tips can help you avoid penalties and future surprises:

• Enroll during your Initial Enrollment Period unless you have other creditable coverage.

• Always confirm if your alternative drug coverage meets Medicare’s standard.

• Keep your annual notice of creditable coverage in case you need proof later.

• Mark your calendar for the AEP each fall.

• Review your drug coverage needs every year.

What This Means for You Right Now

Even if you don’t take prescriptions in 2025, the smarter move is to consider Part D when first eligible—or confirm your current plan is creditable. Delaying coverage opens the door to lifelong penalties and potential gaps in protection just when you may need it most.

A licensed agent listed on this website can help you review your options, evaluate your coverage, and ensure you’re protected from unexpected costs.