Timing

• You can drop out of a Part D plan only during the open-enrollment period, Nov. 15 to Dec. 31 each year. That's also the period during which you can change plans.
  
  

Consider Your Options

• Check the Medicare Prescription Drug Plan Finder for plans with cheaper premiums---even one with no deductible---that might work better for you. If your decision will be based on finances, you might qualify for "Extra Help" with your Plan D plan costs. To see if you are eligible, go to the Social Security webpage devoted to Plan D Extra Help.
  
  

Consequences

• If you drop your plan, you won't be able to join any Part D plan until the open enrollment period of the following year. (There are some exceptions. For example, entering a nursing home or qualifying for "Extra Help.") Plus, when you apply for a Part D plan in the future, you'll pay a permanent premium penalty of 1 percent for every month you were without drug coverage. That's 12 percent in your first year without coverage. Some quick math: For 2010, Medicare lists the average monthly premium at $32 a month. If you had dropped out of your Plan D plan two years ago and you re-enrolled for 2010 in a plan with the average premium, your actual monthly cost would be 24 percent more, or $39.68. And you would continue to pay 24 percent more each month for the rest of your life. There is no maximum to the penalty. For every year you stay out of Part D, you will have an additional 12 percent tacked on to your monthly premium.
  
  

Warning

• Dropping Plan D coverage means you must almost certainly go 12 months without drug coverage. Even a person who has experienced no cautionary health signals can be injured in an accident or struck by an unforeseen disease requiring medication that might cost $1,000 a month or more. Taking the precaution of getting into a plan with the lowest premium will provide insurance against financial calamity, and you'll have the added benefit of avoiding a penalty when you upgrade the plan to match your new prescription drug situation during the next enrollment period.
  
  

Final Step

• If you do nothing, you automatically will be re-enrolled in your current plan. If you decide to drop your Part D plan, you may call Medicare (800-633-4227) or contact your plan directly. Although you can start the cancellation process over the phone, in most cases you will be asked to send written notification that you want to drop your Part D coverage. You will receive a letter confirming that your Part D policy has been canceled.