I’m about to lose health insurance from my employer. How soon must I sign up for Part D prescription drug coverage to avoid being hit with late penalties?

| You don’t need to sign up for Part D prescription drug coverage while you have “creditable” drug coverage from another source. The other source could be a current or former employer, COBRA, the federal employees’ health care system (FEHBP), the military (TRICARE), the Veterans Affairs health system, or private insurance you have purchased yourself. “Creditable” means that Medicare considers the coverage to be of equal or better value than Part D.

The law says that you will be liable for Part D late penalties if you go for more than 63 days without Part D or creditable drug coverage after enrolling in Medicare Part A and/or Part B. So 63 days is often given as the length of the special enrollment period you can use to avoid a penalty. But this isn’t exactly accurate. Rather, you must be actually receiving Part D coverage within 63 days to avoid a penalty.

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For example, let’s say that you lose creditable coverage on March 31. Counting 63 days from that date brings you to June 2. If you leave it to the last minute and sign up with a Part D plan on June 1 or 2, you’re still within the 63-day time frame. But you won’t avoid a penalty because, under Part D rules, your drug coverage actually begins on the first day of the month after you enroll — in this example, July 1. You’re then penalized for one month without coverage. So, to be on the safe side, you should enroll in a Part D plan within two months of creditable coverage ending, rather than 63 days. 

To find out if your current or recent prescription drug coverage is creditable, check your Evidence of Coverage documents or call your plan. Plan administrators are required by law to give you this information. 

If it turns out that your recent drug coverage was not creditable, you would be liable for late penalties. Also, you would not be entitled to a special enrollment period to get fast coverage under Part D. You would have to wait for the next open enrollment period, which runs from Oct. 15 to Dec. 7, with coverage beginning Jan. 1. 

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