What Is Medicare Part D?
As a Medicare beneficiary, you don’t automatically get Medicare Part D prescription drug coverage. This Medicare Part D coverage is optional, but can be valuable if you take medications. If you don’t sign up for Medicare Part D Coverage when you’re first eligible, you might have to pay a late-enrollment penalty if you decide to enroll later.
Many people are automatically enrolled in Original Medicare, Part A and Part B, when they reach 65 years of age. But you may not realize that Original Medicare doesn’t cover most of your medications (except those you may receive as a hospital inpatient or, in some cases, outpatient). Medicare Part B covers certain prescription drugs that you get in an outpatient setting, like a doctor’s office. However, these tend to be the kind of medications that you need a doctor to give you, like infusion drugs.
If you want help with most other medication costs, you’ll need to sign up for Medicare Part D coverage.
Who Can Get Medicare Part D?
Medicare Part D plans are available to those eligible for Medicare. This includes people who are 65 years or older and who are U.S. citizens or permanent residents, people under 65 with certain disabilities and people of any age with End-Stage Renal Disease (ESRD). ESRD is permanent kidney failure that requires dialysis or a transplant. Those who have amyotrophic lateral sclerosis (Lou Gehrig’s Disease) qualify as well.
To join a Part D plan, a Medicare Prescription Drug Plan or a Medicare Advantage Plan, you will need to have Medicare Part A or B. You must also live in the area covered, known as the service area, of the plan you want to join.
Joining a Part D plan is voluntary and you will pay an additional premium for this coverage. If you have other prescription drug coverage, you can wait to enroll on a Part D plan. One thing to keep in mind is that if your prescription drug coverage is not, on average, as good as Medicare Plan D coverage you will most likely have to pay a penalty for joining later. You will have to pay this penalty for as long as you have Medicare prescription drug coverage.
What Does Medicare Part D Cost?
Your actual costs for Medicare Part D prescription drug coverage vary depending on the following:
- The prescriptions you take, and how often
- The stand-alone Medicare Part D Prescription Drug Plan or Medicare Advantage Prescription Drug plan you choose
- Whether you go to a pharmacy in your plan’s network
- Whether your prescription drugs are on your Medicare Part D plan’s formulary (list of covered drugs)*
- Whether you get Extra Help paying your Medicare Part D costs (see below for more details)
*Remember that formularies may change at any time. You’ll be notified by your Medicare plan if necessary.
One of the costs you should consider is your monthly premium. Most stand-alone Medicare Part D Prescription Drug Plans and Medicare Advantage Prescription Drug plans charge a monthly premium that varies by plan, so you’ll be responsible for paying that premium. Please note that if you’re enrolled in a Medicare Prescription Drug Plan and are also enrolled in Medicare Part B, you must also continuing paying your Medicare Part B premium. And, if you’re enrolled in a Medicare Advantage plan (with or without prescription drug coverage), you must continue paying your Part B premium, along with any premium for your Medicare Advantage coverage.
In addition to your monthly premium, the costs for your Medicare Part D coverage may include:
- An annual deductible: This is the amount you pay for your prescriptions before your Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan starts to share in the costs. Deductibles vary by plan, and it may be possible to find one with a $0 deductible amount.
- A copayment/coinsurance: This is the amount you pay out of pocket each time you buy a prescription; it’s your share of the cost after Medicare has paid its part and you’ve reached your plan’s deductible (if any). A copayment is typically a flat amount that you pay (for example, you may pay a $10 copayment when you fill a prescription), while a coinsurance is a percentage you may owe (for example, you might pay a 10% coinsurance for generic medications). These costs can vary from plan to plan, and also vary depending on drug tiers and which stage of the benefit you are in at the time that you fill the prescription. Medicare Prescription Drug Plans and Medicare Advantage plans with prescription drug coverage place covered medications into different cost tiers, and the prescription drugs in higher tiers tend to cost more than those in lower tiers.
People of limited income can qualify for Extra Help. This assistance is linked to the federal poverty level and to your resources. These limits change yearly. If you have Medicaid with prescription drug coverage and Medicare, Medicare and Supplemental Security Income (SSI) or if the state where you live pays your Medicare premiums, you get this help automatically and need not apply.
You can find out more about this from the Social Security Administration or your State Medical Assistance Office.
Where and When Can You Get Medicare Part D?
it’s a good idea to sign up for Medicare Part D as soon as you’re first eligible. If you choose to enroll later or go 63 consecutive days or more without Medicare Part D prescription drug coverage, you may have to pay a late-enrollment penalty, unless you can show that you had creditable prescription drug coverage during the time you were not enrolled in Part D. Creditable prescription drug coverage is coverage that pays at least as much as Medicare’s standard Part D prescription drug coverage. For example, health coverage you may get through your employer may be considered creditable prescription drug coverage. Your insurance should let you know every year whether your coverage is creditable; if you aren’t sure, you should contact your insurance company to check.
As mentioned, you must first have Medicare Part A and/or Part B to be eligible to enroll in a Medicare Prescription Drug Plan and you must have both Medicare Part A and Part B to enroll in a Medicare Advantage Prescription Drug plan (see the above section for full eligibility details). You’re first eligible to sign up for Medicare Part D coverage during your Initial Enrollment Period (IEP) for Part D, which typically takes place during the same seven-month period as your Initial Enrollment Period for Original Medicare. This is the seven-months that starts three months before you turn 65, includes your birthday month, and ends three months later. A good time to sign up for Medicare prescription drug coverage is usually as soon as you’re enrolled in Original Medicare.
You can also sign up for Medicare Part D coverage during the Annual Election Period (AEP), sometimes called the Fall Open Enrollment or Open Enrollment Period for Medicare Advantage and Medicare prescription drug coverage. This takes place from October 15 to December 7. During this time period:
- Enroll in a Medicare Part D Prescription Drug Plan or change from one Prescription Drug Plan to another.
- Disenroll from your Medicare Prescription Drug Plan (if you’re already enrolled in one).
- Enroll in or switch Medicare Advantage Prescription Drug plans.
- Disenroll from your Medicare Advantage plan and return to Original Medicare.
After the Annual Election Period is over, you’ll have one more chance to make changes to your Medicare Part D coverage. If you’re enrolled in a Medicare Advantage plan, you can use the Medicare Advantage Disenrollment Period (January 1 to February 14) to disenroll from your Medicare Advantage plan and return to Original Medicare. Then, regardless of whether your Medicare Advantage plan included prescription drug coverage, you can also use this same period to enroll in a stand-alone Medicare Prescription Drug Plan. These are the only changes you can make during this time frame.
In general, you can only enroll in a Medicare Prescription Drug Plan or make changes to your Part D coverage during one of the above periods. However, there are some situations that qualify you for a Special Election Period (SEP), when you can enroll in a Medicare Part D Prescription Drug Plan or a Medicare Advantage Prescription Drug plan outside of the Annual Election Period. Some examples of situations that may qualify you for a Special Election Period include, but aren’t limited to, moving outside of your plan’s service area or qualifying for Medicaid. An SEP can take place any time of the year that you have a qualifying situation. If you aren’t sure whether you have a situation that applies, feel free to call us at the phone number on this page; a licensed insurance agent would be happy to help you figure out what your options may be.