Prescription Drug Plans (PDP)

Prescription Drug Plans are sometimes considered the most mystical and elusive of the availableMedicare products. A PDP is not required as part of your Medicare planning. However, unless you have credible drug coverage when you become eligible for a drug plan you will incur a penalty for not doing so. That being said,  For 2018, Medicare beneficiaries have a choice of 23 Medicare Part D stand-alone PDPs and 17 MAPD plans in their area, on average. The penalty for the period of not having creditable coverage can be calculated at 1% per month of the average national base beneficiary premium. PDP premiums vary widely across plans in 2018. ($35.02 was the national base beneficiary premium for 2018). 


 On top of that, each plan can have different premiums, deductibles, copays, and formularies. It is virtually impossible to determine the optimum plan for you without considering your medications and using a computer-based program. has such a tool, the one we use was developed by the same company that provides the service on Then there are special programs you may qualify for, then do you need a PDP at all? We have quoting tools that include your medications to choose the best plan for you individually.


Unless you don’t take any meds or think you will you may not need this tool. However, if you or your advisor doesn’t it could cost you dramatically in the long run. So, don’t shortcut yourself by not considering your medications.

How the Part D Penalty Works

Medicare offers prescription drug coverage, known as "Medicare Part D,"for an additional charge to everyone with Medicare. If you don't use a lot of prescription drugs now, you still may want to think about joining a Medicare drug plan to help protect against higher costs in the future.If you don't join a Medicare drug plan when you're first eligible for Medicare, and you don't have creditable prescription drug coverage, you may have to pay a late enrollment penalty if you join later.You don't have to pay a penalty if you have and keep creditable prescription drug coverage, or if you get Extra Help, a Medicare program that helps people with limited income and resources pay for their prescriptions.You're probably wondering what we mean by "creditable prescription drug coverage."Simply put, it's drug coverage that's expected to pay, on average, at least as much as Medicare's standard prescription drug coverage.It could include drug coverage from a current or former employer or union, or TRICARE, the Indian Health Service, or the department of Veterans Affairs If you have creditable prescription drug coverage when you first become eligible for Medicare, generally you can keep it without paying the late enrollment penalty if you sign up for Part D later.

The late enrollment penalty is added to your monthly Medicare Part D premium and the amount depends on how long you went without creditable prescription drug coverage.Here's how it's calculated.We multiply 1% of something called the "national base beneficiary premium" times the number of full, uncovered months you were eligible but didn't join a Medicare Prescription Drug Plan and that you didn't have creditable prescription drug coverage.The final amount is rounded to the nearest ten cents and is added to your monthly premium.Don't want to pay the penalty?

There are 3 ways to avoid it.One, join a Medicare Prescription Drug Plan when you're first eligible.Two, make sure you don't go 63 days or more in a row without a Medicare drug plan or other creditable coverage, and three,tell your plan about any drug coverage you had if they ask you about it. If your plan thinks you went for some time without creditable drug coverage, you may have to pay a penalty.To learn more about the Part D late enrollment penalty, visit

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