Medicare Part D Prescription Drug Coverage
What is Medicare Part D Prescription Drug Coverage?
As a Medicare beneficiary, you do not automatically receive Medicare Part D prescription drug coverage. This Medicare Part D coverage is optional, but can be valuable if you take medications. If you do not sign up for Medicare Part D Coverage when you are first eligible, you might have to pay a late-enrollment penalty if you decide to enroll later.
When a person is enrolled in Original Medicare, Parts A, and B, they may not realize that Original Medicare does not cover most of your medications (except those you may receive as a hospital inpatient or, in some cases, outpatient). Medicare Part B does cover certain prescription drugs that are administered to you in an outpatient setting, like a doctor’s office. These tend to be the type of medications that are administered to you by a doctor, like infusion drugs. If you need help with most other medication costs, you will need to sign up for Medicare Part D coverage.
What types of Medicare Part D Prescription Drug Plans are Available?
You can get Medicare Part D prescription drug coverage in two different ways, depending on whether you are enrolled in Original Medicare or Medicare Advantage. Medicare Advantage, also known as Medicare Part C, is an alternative way to get your Original Medicare benefits through a Medicare health plan. Many plans may also offer benefits beyond the coverage of the original Medicare program and can include prescription drug benefits.
Medicare Part D coverage is available through the following outlets:
- A stand-alone Medicare Part D Prescription Drug Plan—you can add this benefit to your Original Medicare coverage. You can enroll in any Part D Prescription Drug Plan that serves the area where you live.
- A Medicare Advantage Prescription Drug plan—you can get a Medicare Advantage (Part C) plan that includes prescription drug coverage, so that you get all your Medicare benefits under one plan.
Am I Eligible for a Medicare Part D Prescription Drug Plan?
You are eligible for Medicare Part D prescription drug coverage if:
- You have Part A and/or Part B.
- You live in the service area of a Medicare Part D Prescription Drug Plan.
Please note that if you decide to get your prescription drug coverage through a Medicare Advantage plan, you must have both Part A and Part B, live in the service area of a Medicare Advantage plan, and (in most cases) cannot have end-stage renal disease (ESRD). Not every Medicare Advantage plan covers prescription drugs, so double check with the plan you are interested in.
When can I sign up for Medicare Part D coverage?
As mentioned, you do not have to enroll in Medicare Part D coverage. That decision will not affect the Original Medicare coverage. If you are currently taking medications, or feel that in the future, this may be a coverage that you will need, it may be beneficial for you to enroll in a part D plan. You can enroll in either, a stand-alone Medicare Part D Prescription Drug Plan, or enroll in a Medicare Advantage Prescription Drug plan (Medicare Part C), which includes your Medicare Part D benefits to get help with your prescription drug costs. If you do not sign up for Part D, you may have to pay for your medications out of pocket unless you have other insurance.
It is a good idea to sign up for Medicare Part D as soon as you are first eligible for Medicare. If you choose to enroll in a Medicare Part D plan later, or go 63 consecutive days or more without Medicare Part D prescription drug coverage, you may have to pay a late-enrollment penalty. This penalty is charged 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 credible; if you are not sure, you should contact your insurance company to make sure your current coverage is credible under Medicare rules.
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. You are 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 or Medicare Advantage coverage is usually as soon as you are 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 of each year. During this period, you can:
- 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 are already enrolled in one).
- Enroll in or switch Medicare Advantage Prescription Drug plans.
- Disenroll from your Medicare Advantage plan and return to Original Medicare.
Once you have enrolled in a plan during the open enrollment, your coverage will start on the first of the year. After the Annual Election Period is over, you will have one more chance to make changes to your Medicare Part D coverage. Medicare Advantage Open Enrollment Period runs from January 1 – March 31 every year. If you are enrolled in a Medicare Advantage plan, you will have a one-time opportunity to:
- Switch to a different Medicare Advantage plan
- Drop your Medicare Advantage plan and return to Original Medicare, Part A and Part B
- Sign up for a stand-alone Medicare Part D Prescription Drug Plan (if you return to Original Medicare). Most Medicare Advantage plans include prescription drug coverage already. Usually you cannot enroll in a stand-alone Medicare Prescription Drug plan, if you already have a Medicare Advantage plan, but there are some situations where you can.
If you are 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 period.
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, some situations 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 and Open Enrollment periods. Some examples of situations that may qualify you for a Special Election Period include, but are not limited to, moving outside of your plan’s service area or qualifying for state Medicaid or prescription drug help. A Special Enrollment Period (SEP) can take place any time of the year that you have a qualifying situation. If you are not 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.
What is the Medicare Part D Coverage Gap (“Donut Hole”), and How Can I avoid it?
The coverage gap (or “donut hole”) refers to the point when you and your Medicare Part D Prescription Drug Plan or Medicare Advantage Prescription Drug plan have spent a certain total amount on covered prescriptions; this amount is also known as your initial coverage limit. Once you have reached your initial coverage limit, you are in what is known as the coverage gap, also known as the “donut hole.”
During this phase of your Part D benefits, you pay a higher portion of your prescription drug costs. After you have spent a certain amount, you will reach the catastrophic coverage phase, and you will pay only a small copayment or coinsurance for your covered medications for the rest of the year. Each year Medicare sets amounts of what the limits on the coverage gap will be. Part D plans and Medicare Advantage plans do have the options of limiting the coverage gap amounts that a policyholder has to pay if they fall into the coverage gap. These are limited to specific plan coverages and are only offered in plans that specify that they offer these coverage’s.
There are several things you can do to help reduce your prescription drug costs. For example:
- Switch to lower-cost medications. Talk to your doctor about using generic and/or over-the-counter prescription drugs and whether these options could work for your condition(s). Many generic drugs work as well as costly brand-name prescriptions, and this could save you money each year and keep you out of the coverage gap.
- Ask your plan about prescription mail-order programs. They can save you money on medications that you take over a longer period (for example, a 30-day or 90-day supply).
- If your Medicare plan requires you to use network pharmacies, make sure you fill your prescriptions at pharmacies in your plan’s network or the plan may not cover you. In addition, some plans may have lower cost sharing if you use not just in-network pharmacies, but preferred pharmacies in the plan’s network, so check with your plan whether getting your prescriptions filled at certain pharmacies may save you money.
- Always, use your Medicare plan membership card when you get your medications. When using your card, you may be able to get discounted rates on the prescription drugs you buy, and any money spent on covered medications automatically counts toward your plan’s deductible (if it has one).
- Look for programs that offer assistance. The National Patient Advocate Foundation or the National Organization for Rare Disorders may have programs that can help with your prescription drug costs. Comprehensive information about federal, state, and private assistance programs in your area is available from the National Council on Aging.
- Apply for the Extra Help (Low-Income Subsidy) program if you have limited income. Extra Help assists low-income beneficiaries with their prescription drug costs, and, if you are eligible, you will not enter the coverage gap. You can learn more and find out if you qualify by contacting the Social Security, or the Medicaid program in your state.
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 will 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 to charge a monthly premium that varies by plan, so you will be responsible for paying that premium. Please note that if you are enrolled in a Medicare Prescription Drug Plan and are also enrolled in Medicare Part B, you must also continue paying your Medicare Part B premium. Also, if you are 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 of your prescriptions that you will be responsible to pay, before your Medicare Part D Prescription Drug Plan, or Medicare Advantage Prescription Drug plan will pay. Deductibles vary by plan, but it may be possible to find one with a low deductible amount.
- A copayment/coinsurance: This is the amount you pay out of pocket each time you buy a prescription; it is 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.
You can get help with Medicare Prescription Drug Plan costs if you qualify for income-based subsidies. Please see Medicare Subsidies for further details.