You are not required to enroll in Medicare Part D, but there are financial penalties if you wait

Medicare Part D covers prescription drugs. You do not have to take it — it is optional. However, if you go without Part D coverage and later decide you want it, Medicare charges you a penalty for each month you were uninsured. The penalty is permanent and added to your premium for as long as you have Part D.

The penalty exists because Medicare wants people to sign up when they first become may be able to access, rather than waiting until they have expensive prescriptions. If you have other drug coverage — through an employer, a union, or Veterans Affairs — you may be able to avoid the penalty even if you do not enroll in Part D.

Key Takeaways

  • Part D is optional, but skipping it without other drug coverage triggers a permanent monthly penalty added to your premium later.
  • The penalty is roughly 1% of the national average Part D premium for each month you were without coverage, and it stays with you permanently.
  • You can avoid the penalty if you have creditable coverage — drug insurance through an employer, union, or VA that is at least as good as Part D.
  • The best time to enroll is during your Initial Enrollment Period, which starts three months before you turn 65 and lasts seven months.
  • If you miss that window, you can enroll during the annual open enrollment period (October 15 to December 7 each year) or if you have a may have access to life event.

When the penalty applies and how much it costs

The penalty is calculated as 1% of the national average Part D premium for each full month you were may be able to access but not enrolled. In 2024, the national average premium is roughly $34 per month, so the penalty is approximately $0.34 per month of non-coverage. That number changes each year based on the national average, so your penalty will be different depending on when you enroll.

The penalty is added to your Part D premium every month you have coverage. If you go three years without Part D and then enroll, you will pay the penalty for the rest of your life as a Part D member — it does not expire. This is why it matters whether you have other coverage: if your employer or union plan is creditable coverage (meaning it covers drugs at least as well as Part D does), you can delay enrollment without penalty.

What counts as creditable coverage that protects you from the penalty

Creditable coverage means drug insurance that is at least as good as Medicare Part D. Your employer or union should tell you in writing each year whether your plan is creditable. If you have coverage through a current or former employer, a union, the Veterans Health Administration, or certain other sources, ask them directly whether it is creditable.

If you have creditable coverage, you can turn down Part D without penalty. When that coverage ends — because you retire, leave the job, or the plan closes — you have a two-month window to enroll in Part D without penalty. If you miss that window, the penalty clock starts.

Medicare sends you a notice each year if you have creditable coverage on file. If you do not receive one and you think you should, contact your drug plan or your employer's benefits office to confirm your coverage status and ask them to report it to Medicare.

How to enroll in Part D and when the important date are

Your Initial Enrollment Period begins three months before the month you turn 65 and lasts for seven months total. For example, if you turn 65 in June, your enrollment period runs from March through September. During this time, you can enroll in any Part D plan offered in your area without penalty, even if you do not yet have Part D coverage.

If you miss your Initial Enrollment Period, you can enroll during the annual open enrollment period, which runs from October 15 through December 7 each year. Coverage begins January 1 of the following year. You can also enroll if you have a may have access to life event — such as losing employer coverage, moving to a new state, or becoming may be able to access for extra help paying for drugs — within 60 days of that event.

To enroll, visit Medicare.gov, call 1-800-MEDICARE, or visit your local Social Security office. You will choose a Part D plan offered in your area. Plans vary in cost, which drugs they cover, and which pharmacies you can use, so comparing plans before you choose is worth your time.

What happens if you do not have Part D and do not have other coverage

If you have no drug coverage at all and you do not enroll in Part D during your Initial Enrollment Period, you will owe a penalty when you do enroll later. The longer you wait, the larger the penalty becomes. There is no way to waive or reduce the penalty once it has been assessed.

If you cannot afford Part D premiums, you may be able to get help paying them. Medicare offers Extra Help (also called the Low-Income Subsidy) to people with limited income and resources. You can explore through Social Security, your state Medicaid office, or online at SSA.gov. Extra Help can cover most or all of your Part D premium and reduce your out-of-pocket costs for drugs.

Changing your Part D plan or dropping coverage

Once you enroll in Part D, you can change plans during the annual open enrollment period (October 15 through December 7). You can also switch plans if you have a may have access to life event, such as moving out of your plan's service area or losing other drug coverage.

You can drop Part D coverage at any time, but if you do and later re-enroll, you will owe a penalty for the months you were without coverage. The only exception is if you have creditable coverage from another source during the time you are not enrolled in Part D.

Questions to ask your doctor and your insurance company

Before you decide whether to enroll in Part D, ask your doctor which medications you currently take and which ones you are likely to need in the coming year. Then use the Medicare Plan Finder tool on Medicare.gov to see how much those specific drugs would cost under different Part D plans in your area.

If you have employer coverage, ask your benefits office whether your drug plan is creditable and whether it will continue after you retire. If you are considering dropping Part D, ask your current plan what the penalty would be if you re-enroll later. If you think you might may have access to for Extra Help, ask Social Security or your state Medicaid office about the income and resource limits.

When to contact Medicare or your plan

Contact Medicare if you are unsure whether you are in your Initial Enrollment Period, if you think you should have been notified about creditable coverage but were not, or if you want to compare Part D plans before you choose. Call 1-800-MEDICARE or visit Medicare.gov.

Contact your current drug plan if you want to know whether your coverage is creditable, if you are thinking about dropping coverage, or if you have questions about your current benefits. Contact your employer or union benefits office if you are retiring soon and want to know how your drug coverage will change.

Frequently Asked Questions

What if I have Medicare Advantage instead of Original Medicare — do I still need Part D?

Most Medicare Advantage plans include drug coverage built in, so you do not need a separate Part D plan. However, some Medicare Advantage plans do not cover drugs, so check your plan documents. If your Advantage plan does not include drug coverage and you do not enroll in Part D, you will owe a penalty if you enroll later.

Can I enroll in Part D after I turn 65 if I missed my Initial Enrollment Period?

Yes, but you will owe a penalty. You can enroll during the annual open enrollment period (October 15 to December 7) or if you have a may have access to life event. The penalty is permanent and based on how many months you were without coverage.

If I have Part D and move to a different state, can I keep my current plan?

No. Part D plans are regional, so if you move out of your plan's service area, you must choose a new plan. You have 60 days from the date you move to enroll in a new plan without penalty. Contact your current plan or Medicare to find plans available in your new location.

What if I cannot afford Part D premiums?

You may be able to get Extra Help through Social Security or your state Medicaid office. Extra Help covers most or all of your Part D premium and reduces your out-of-pocket drug costs. Income and resource limits explore, and you can explore online at SSA.gov or through your local Social Security office.

Does the Part D penalty ever go away?

No. Once the penalty is assessed, it is permanent and stays with your Part D premium for as long as you have coverage. This is why enrolling during your Initial Enrollment Period or while you have creditable coverage is important — it prevents the penalty from starting in the first place.