Why is it that every time you think you've made a smart decision, some complication arises as if to say, "Not so fast -- you forgot about this!"

I started thinking about this recently after I had dinner with my friend Geri, who is 76 and has had some medical problems lately. She shared with me her horror at the price of prescription drugs. I stopped her and said, "Wait a minute -- don't you have coverage under Medicare Part D for those new drugs?" Geri told me she had not signed up for Part D when she originally enrolled in Medicare because her pharmacist (yikes!) told her at the time that she would be crazy to pay for Part D because she took so few drugs -- and the ones she did take at that time were relatively inexpensive.

I would venture to guess that the pharmacist, while quite drug-savvy, was not so Medicare-savvy.

The question that pops into the minds of many at this point is, shouldn't everyone sign up for Medicare Part D at age 65? Well, you can actually choose whether or not to enroll, and that choice involves 1) placing a wager on the state of your health in the future, 2) knowing the specific medications that you may require and 3) knowing the future cost of that medication.

If you had a crystal ball, then a decent risk-reward analysis might be possible. But I'm guessing you don't, so forgoing Medicare Part D coverage is a huge gamble. Let me explain with an example you're probably familiar with.

It's all about risk management
My neighbor, Larry, doesn't carry homeowner's insurance on his paid-in-full home. I think he's crazy, especially from a liability standpoint, but he looks at it as an opportunity to take the $3,000 a year that homeowner's insurance would cost him, invest the money, and have an emergency pot of cash ready in case he needs it. So far this gamble has worked out for him, as he has been socking his money away each year for the last 10 years instead of paying a premium. Larry has accumulated a tidy little sum of about $37,000 (he played it safe in this respect and earned 4%-5%).

Lucky for Larry, a hurricane has not blown the roof off of his house and sucked all of his furnishings into never-never land -- or, worse yet, through the large picture window of his neighbor, Angie. His cute little dog, Freida, has fortunately not bitten a neighbor. Larry is lucky but foolish (and not in the good, capital "F" way). He has risked a great deal to save himself $3,000 a year (about 1% of the replacement cost of his home).

Larry could make out OK if he never has to file a claim, but this is a game of Russian roulette, and it ignores the entire purpose of insurance. Insurance is a risk-management tool; it is a safety net that can save you if the unexpected happens. You can go without it, but do you really want to?

Back to Medicare
Now, 11 years after that ill-fated conversation with her pharmacist, poor Geri now has to take some fairly pricey drugs. Instead of spending her days on the golf course, where she'd really like to be, Geri spends hours shopping on various Internet sites before eventually forking over a king's ransom for her medications. She contacted Medicare to find out whether she can sign up now, and to her delight, she can. However, a penalty would be added on to her monthly premium for every month that has passed since she became eligible for Part D but did not sign up. And it gets worse: The penalty lasts forever.

Here's how the Medicare website explains the penalty:

Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($33.13 in 2015) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $0.10 and added to your monthly Part D premium.

This means that coverage that would normally have cost Geri around $33.13 per month (depending upon which plan she picks, how much she makes, and where she lives) when she originally signed up for Medicare at age 65 would now cost her in the neighborhood of $76.87 per month today (the base of $33.13 plus the penalty of $43.73 rounded to the nearest $0.10) because she was past her election date by 132 months. That adds up to a penalty of $524.80 per year for the rest of her life!

If Geri's meds are expensive, it might be worth her while to bite the bullet and pay the toll. For example, what if Geri needed Soliris, which is considered the most expensive prescription drug on the market right now at a cost of $440,000 per year? Yes, it's an exceptionally pricey drug, but there are many others that run over $100,000 per year.

Websites like GoodRX can provide coupons and direct you to the lowest prices for many prescription drugs, but sometimes Medicare Part D can cover your biggest prescription expenses.

Prepare for the worst and hope for the best
So, when you sign up for Social Security and have to make that Part D decision, don't just think about paying a premium today -- think about the ramifications of your actions further down the road. A monthly premium of $33.13 is a pittance to pay for the peace of mind it can bring you. Furthermore, taking financial advice from your pharmacist is no wiser than taking medication advice from your financial advisor. The discussions you may have with these professionals can be thought-provoking, but you should always do some research on your own and make sure whatever decision you make is, without doubt, the best choice for you.

The Part D election is complicated. You have to decide not only whether to sign up, but also which plan to sign up for. Some research is required. The Medicare open-enrollment period each year runs from Oct. 15 to Dec. 7; this is the window when you can sign up for new coverage or make changes to existing coverage.

For more information on the costs of Medicare Part D and the options available to you, check out Medicare.gov.

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