Don’t dismiss Medicare drug benefits out of hand — even if right now you have good coverage or don’t take any prescription drugs. First consider all the angles, because there may be important consequences if you don’t.

Do I need Medicare drug coverage — when I don’t use any prescription drugs right now?

If you use few or no drugs now, you may wonder if it’s worth signing up for Part D, because you’d be paying a premium to your plan but getting nothing back. But Medicare drug coverage is not just a government benefit. It’s mainly insurance, which — like all other kinds of insurance — protects you against high drug costs if and when you need it in the future. In these circumstances, consider enrolling in the Part D plan in your area that has the lowest premium, which would give you coverage at the least cost.

Can I wait and sign up later when I need coverage?

Yes, but consider this carefully. There will be a financial penalty if:

• You enroll later than when you were first eligible to join Part D.
  
  
• You have gone for more than 63 days without other drug coverage that is considered as good as Part D coverage.
  

What is the late enrollment penalty?

At least an extra 1 percent of the national average premium will be added to your premium for each month that you delay and are without creditable drug coverage, and you will pay the penalty (which increases each year along with the average premium) for as long as you have Medicare drug coverage. In other words, if you delay for 20 months, your Part D premiums will always be at least 20 percent more than other people pay — or you would have paid if you’d signed up on time.

For 2012 the national average premium is $31. So each month you go without coverage adds 31 cents (1 percent of $31) to your monthly premium. For example, if you sign up for Part D during open enrollment in November or December 2012, and you’ve been without creditable drug coverage for 20 months after first becoming eligible to join Part D, your penalty would be $6.20 a month or $74.40 over the year on top of your regular plan premiums. If the national average premium increases or reduced in 2014 and subsequent years, your penalty gets higher or lower also.

How can I avoid a late penalty?

Avoiding a late penalty depends on what is the “right” time for you to sign up for Part D. Depending on your circumstances it could be:

• When you turn 65 (and have no other drug coverage that is as good as Medicare), you need to join a Part D drug plan during the 7-month initial enrollment period when you can sign up for Medicare Part A and Part B. This period runs from three months before the month of your 65th birthday to three months after it. For example, if you turn 65 on July 16, you should join a drug plan before the end of October at the latest (with coverage starting Nov. 1) to avoid a penalty.
  
  
• When you become eligible for Medicare through disability (and have no other drug insurance as good as Medicare), you get a similar seven month period to sign up for Part D as well as Parts A and B. This period runs from three months before the 25th month in which you have received Social Security disability payments and ends three months after it.
  
  
• When you lose drug coverage (for example, from a current or former employer or union) that is at least as good as Medicare, you would not pay a late penalty if you then enroll in a Medicare drug plan and begin receiving Part D coverage within 63 days of losing your original coverage.
  
  
• When you lose drug coverage under COBRA, you would not pay a late penalty if you enroll in a Medicare drug plan and begin receiving Part D coverage within 63 days of your COBRA drug benefits ending, provided that these benefits (an extension of employer benefits after retirement or losing a job) are considered at least as good as Part D.