Ask Ms. Medicare: Should I Drop Part D If I Don’t Need Prescription Drugs?

Q. I’ve been enrolled in Medicare Part D for prescription drugs, but I don’t take any meds and the premium seems a waste of money. Can I quit my Part D plan? And if I do, what are the consequences later on if I want to re-enroll when I do need prescription drugs?

A. You can quit Part D during the annual open enrollment period, which is for enrolling and disenrolling, that runs from Nov. 15 through Dec. 31. You need to contact your Part D plan and inform the plan that you want to disenroll—otherwise, if you do nothing, you will be re-enrolled in the same plan automatically for next year.

But, yes, there are consequences:

• When you finally re-enroll, you’ll get a late penalty in the form of a permanent surcharge on your Part D premiums that will increase over time. Every year you are without drug coverage adds 12 percent of the national average monthly premium ($32 in 2010) to the premium you pay your plan, as explained in more detail in a previous Q&A on the Part D late penalty.

• You won’t be able to re-enroll in Part D whenever you want. You can enroll only during the annual open enrollment period (always Nov. 15 to Dec. 31) except in a few special circumstances such as moving to another state, entering a nursing home or becoming eligible for Extra Help available for low-income beneficiaries.

• You will be without drug coverage.

The third point is much more important that the previous two. Even a person with the healthiest lifestyle suddenly can be struck by an unforeseen disease or an accidental injury that requires expensive drugs. Some drugs, especially for cancer, can cost thousands of dollars a month. You are not allowed to enroll or re-enroll in Part D, outside the annual open enrollment period, just because you suddenly develop an urgent medical need for prescription drugs and cannot afford to pay the full price out of pocket.

Therefore, you may want to consider a compromise: Enroll in the Part D plan that has the lowest premium in your area. That way, you maintain coverage but at the least cost. You can find out which plan has the lowest premiums by using Medicare’s online drug plan finder tool, which allows you to compare local plans. Or you can call the Medicare help line at 1-800-633-4227 for this information.

If you use open enrollment to sign up for a plan that’s different from the one you had this year, you don’t need to actively disenroll from your current plan. Just enroll in the new plan, and this one will automatically take over your coverage for next year, starting Jan. 1.

Many Part D enrollees who currently take no prescription drugs, or very few, often feel indignant about spending a lot on premiums and getting nothing in return, and they think the late penalty is unfair. But Part D is insurance. You buy it in advance so that it will be there if and when you need it—just like you buy home insurance in case the house catches fire and auto insurance in case you total the car. Plus: Healthy people must be in the system to spread the financial risk and hold down costs. If Medicare beneficiaries were allowed to enroll in Part D only when they became sick, coverage would be so expensive that it wouldn’t be affordable for most people.

Note: The information above applies only to people who don’t have “creditable” drug coverage from elsewhere—such as from a current or former employer. “Creditable” means that Medicare considers this coverage at least as good as Part D. If you have this kind of coverage, you don’t need Part D. And if you lose it involuntarily sometime in the future, you’ll get a special enrollment period of two months to sign up with a Part D plan without penalty. But if you choose to drop creditable coverage (for example, if the premiums become too expensive), you can enroll in Part D only during open enrollment.

Patricia Barry is a senior editor with the AARP Bulletin.