Drug Coverage: What is Medicare Part D?
Medicare drug coverage helps pay for prescription drugs. If you don’t currently require any prescriptions, there are still reasons to consider getting Medicare drug coverage.
Medicare drug coverage (Part D) is optional and is offered to everyone with Medicare part A and/or part B. To have a separate drug plan, you must already be enrolled in Medicare part A and/or part B.
Part D is provided through Medicare prescription drug plans or many different Medicare Advantage plans. Each plan can vary in cost and specific drugs covered.
What are the late enrollment penalties?
If you decide not to get Medicare Part D when you’re first eligible, and you don’t have other creditable prescription drug coverage (coverage from an employer or union, etc.), you’ll pay a late enrollment penalty if you join later.
So if you don’t currently have any prescriptions, it’s still worth looking into Part D coverage, because the penalty fees can add up!
The late enrollment penalty is determined annually and compounds for every month you were eligible but not enrolled. Generally, you’ll pay this penalty as an addition to your monthly premium for the entire duration you have Medicare drug coverage.
You may also have an enrollment penalty for a break in coverage of at least 63 consecutive days.
When are the Medicare Part D enrollment periods?
You become eligible for Part D enrollment when you first qualify for Medicare: when you turn 65 or have an eligible disability. You can enroll 3 months before turning 65 or 3 months after your birthday. This is called the Initial Enrollment Period.
If you miss your Initial Enrollment Period, you can enroll during the General Medicare Enrollment Period at the beginning of the year, January 1 to March 31. This will give you coverage starting July 1st.
For the following years, you can enroll (or change/update plans) during the Open Enrollment Period each year from October 15th to December 7th.
Occasionally you may qualify for a Special Enrollment Period if you have special circumstances or certain life changes. Speak with an agent to know if you qualify for a Special Enrollment Period.
How much does Medicare Part D Cost?
Medicare beneficiaries who are considered “high-income earners” pay a higher premium for Part D coverage. The additional premium amount will be deducted from the beneficiary’s Social Security benefit payment. The increase based on income does not affect rates charged by health insurance companies.
Refer to the chart below to see if you are considered a “high-income earner” and your Part D will be affected by a monthly premium adjustment.
Which Prescriptions are Covered?
Prescription coverage and rules vary by plan. Talk to an agent to make sure the prescriptions you need are covered under your plan. Medicare plans are NOT one-size-fits-all!
All Part D plans are required to have a list of covered drugs known as a formulary, which is available online for each plan.
The drugs are listed by drug category and class, use, and whether they are brand or generic.
Within these categories, drugs fall within five tiers:
Tier 1: Preferred generic drugs
Tier 2: Non preferred generic drugs
Tier 3: Preferred brands
Tier 4: Non preferred brands
Tier 5: Specialty drugs
Generally, Tier 1 drugs will be the least expensive and Tier 5 drugs will be the most expensive. It is important to know where your prescriptions fall on the tier list for your plan.
The best way to learn about Medicare Part D is to talk to an insurance agent! We can help you find the best plan for covering your prescriptions!