COBRA and Part D Penalties: What Counts?
COBRA only protects you from a Part D late enrollment penalty if the prescription drug coverage is creditable. Keep the creditable coverage notice and avoid a 63-day gap after Medicare eligibility.
Frequently Asked Questions
- How do I know if my COBRA drug coverage is creditable?
- Your employer or plan must send you a creditable coverage notice each year before October 15 and whenever coverage ends. The notice will state whether the drug coverage is creditable. Keep a copy.
- What is the 63-day rule for Part D?
- If you go 63 or more consecutive days without creditable prescription drug coverage after you are first eligible for Part D, you may face a late enrollment penalty when you eventually join a Part D plan. The penalty is 1% of the base premium per month of uncovered gap.
- Does the Part D penalty ever go away?
- No. The Part D late enrollment penalty is permanent for as long as you have Part D coverage. It adjusts annually because it is based on the national base beneficiary premium, which changes each year.