What is one way customers can avoid penalties when enrolling in Medicare prescription drug coverage?

Having creditable coverage prior to Medicare enrollment is a key way to avoid penalties when enrolling in Medicare prescription drug coverage. Creditable coverage refers to prescription drug coverage that is at least as good as Medicare's standard prescription drug coverage. If an individual has had such coverage, they are not penalized for delayed enrollment in Medicare's drug plan when they eventually sign up. This is important because if individuals enroll in Medicare after their Initial Enrollment Period without having creditable coverage, they may face a late enrollment penalty, which adds to their monthly premium.

The other options, while beneficial to understand, do not directly prevent penalties. Enrolling immediately upon becoming eligible can help with timely access to coverage but does not specifically relate to avoiding penalties if one already has creditable coverage. Keeping applications up to date ensures that one's personal information is current but doesn’t address penalty avoidance specifically. Reading updates from Medicare is helpful for staying informed, but it doesn’t directly influence penalty avoidance either. Thus, having creditable coverage prior to enrolling is the most effective way to avoid any penalties.