Medicare Prescription Drug Coverage (Part D)
Medicare offers prescription drug coverage to everyone with Medicare. If you decide not to join a Medicare drug plan when you're first eligible, and you don't have other creditable prescription drug coverage, or you don't get Extra Help, you'll likely pay a late enrollment penalty. To get Medicare prescription drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and drugs covered.
2 Ways to Get Medicare Drug Coverage
There are two ways to get Medicare prescription drug coverage:
- Medicare Prescription Drug Plans. These plans (sometimes called "PDPs") add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
- Medicare Advantage Plans (like an HMO or PPO) or other Medicare health plans that offer Medicare prescription drug coverage. You get all of your Part A and Part B coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called "MA-PDs." You must have Part A and Part B to join a Medicare Advantage Plan. Both types of plans are called "Medicare drug plans." In either case you must live in the service area of the Medicare drug plan you want to join.
When Can You Join a Medicare Drug Plan?
- Between October 15 – December 7, anyone can join, switch, or drop a Medicare drug plan. The change will take effect on January 1 as long as the plan gets your request by December 7.
- When you're first eligible for Medicare, you can join during the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65.
- If you get Medicare due to a disability, you can join during the 7-month period that begins 3 months before your 25th month of disability, includes your 25th month of disability, and ends 3 months after your 25th month of disability. You'll have another chance to join that starts 3 months before the month you turn 65 ends 3 months after the month you turn 65.
Special Enrollment Periods
You generally must stay enrolled for the calendar year. However, in certain situations, you may be able to join, switch, or drop Medicare drug plans at other times:
- If you move out of your plan's service area
- If you lose other creditable prescription drug coverage
- If you live in an institution (like a nursing home)
How to Join a Medicare Drug Plan
Once you choose a Medicare drug plan, you may be able to join by:
- Enrolling on the plan's Web site or on www.medicare.gov
- Completing a paper application
- Calling the plan
- Calling 1-800-MEDICARE
When you join a Medicare drug plan, you'll give your Medicare number and the date your Part A and/or Part B coverage started. This information is on your Medicare card.
How to Drop Your Medicare Drug Plan
- You can disenroll by calling 1-800-MEDICARE.
- You can also send a letter to the plan to tell them you want to disenroll.
If you drop your plan and want to join another Medicare drug plan later, you have to wait for an enrollment period. You may have to pay alate enrollment penalty.
What You Pay for Medicare Drug Coverage
You'll make these payments throughout the year in a Medicare drug plan:
- Monthly premium
- Yearly deductible
- Copayments or coinsurance
- Costs in the coverage gap
- Costs if you get Extra Help
- Costs if you pay a Late Enrollment Penalty
Your actual drug plan costs will vary depending on:
- The prescriptions you use and whether your plan covers them
- The plan you choose
- Whether you go to a pharmacy in your plan's network
- Whether your drugs are on your plan's formulary
- Whether you get Extra Help paying your Part D costs
Look for specific Medicare drug plan costs, and then call the plans you're interested in to get more details.
Monthly Premium
Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B premium. If you belong to a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium you pay to your plan may include an amount for prescription drug coverage.
Get Your Premium Automatically Deducted
Contact your drug plan (not Social Security) if you want your premium deducted from your monthly Social Security payment. Your first deduction will usually take 3 months to start, and 3 months of premiums will likely be deducted at once.
After that, only one premium will be deducted each month. You may also see a delay in premiums being withheld if you switch plans. If you want to stop premium deductions and get billed directly, contact your drug plan.
Your Premium Could Be Higher Based on Income
A small group—fewer than 5% of all people with Medicare—may pay a higher monthly premium for Part D coverage based on their income. This includes Part D coverage you get from a Medicare Prescription Drug Plan, or a Medicare Advantage Plan or Medicare Cost Plan that includes Medicare drug coverage.
If your modified adjusted gross income as reported on your IRS tax return from 2 years ago (the most recent tax return information provided to Social Security by the IRS) is above a certain limit, you'll pay an extra amount in addition to your plan premium. Usually, the extra amount will be deducted from your Social Security check.
Costs in the Part D Coverage Gap
Most Medicare drug plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs.
Once you enter the coverage gap, you get a 50% manufacturer-paid discount on covered brand-name drugs. Although you'll only pay 50% of the price for that brand-name drug, the entire price will count as out-of-pocket spending, which will help you get out of the coverage gap. You'll also save 7% of the plan's cost for all generic drugs until you reach the end of the coverage gap.
Some Part D Plans Offer Additional Gap Coverage
There are plans that offer additional coverage during the gap, like for generic drugs. However, plans with additional gap coverage may charge a higher monthly premium. Check with the drug plan first to see if your drugs would be covered during the gap. Talk to your doctor or other health care provider to make sure you're taking the lowest cost drug available that works for you. You may also be able to save money during the gap in other ways.
What Is the Part D Late Enrollment Penalty?
The late enrollment penalty is an amount added to your Part D premium. You may owe a late enrollment penalty if, at any time after your initial enrollment period is over, there is a period of 63 or more days in a row when you don't have Part D or other creditable prescription drug coverage.
3 Ways to Avoid the Late Enrollment Penalty
- Join a Medicare drug plan when you're first eligible. You won't have to pay a penalty, even if you've never had prescription drug coverage before.
- Don't go 63 days or more in a row without a Medicare drug plan or other creditable coverage. Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, the Department of Veterans Affairs, or health insurance coverage. Your plan must tell you each year if your drug coverage is creditable coverage. You may get this information in a letter or in a newsletter from the plan. Keep this information, because you may need it if you join a Medicare drug plan later.
- Tell your plan about any drug coverage you had if they ask about it. When you join a Medicare drug plan, the plan will send you a letter if it believes you went at least 63 days in a row without other creditable prescription drug coverage. The letter will include a form asking about any drug coverage you had. Complete the form and return it to your drug plan by the deadline in the letter. If you don't tell the plan about your creditable drug coverage, you may have to pay a penalty.
How much is the Part D Penalty?
The cost of the late enrollment penalty depends on how long you went without creditable prescription drug coverage.
The late enrollment penalty is calculated by multiplying 1% of the "national base beneficiary premium" ($32.34 in 2011) times the number of full, uncovered months you were eligible but didn't join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium.
The national base beneficiary premium may increase each year, so the penalty amount may also increase every year.
What Part D Plans Cover
Each plan has its own list of covered drugs (called a formulary). Many Medicare drug plans place drugs into different "tiers" on their formularies. Drugs in each tier have a different cost.For example, a drug in a lower tier will generally cost you less than a drug in a higher tier. In some cases, if your drug is on a higher tier and your prescriber (your doctor or other health care provider who is legally allowed to write prescriptions) thinks you need that drug instead of a similar drug on a lower tier, you or your prescriber can ask your plan for an exception to get a lower copayment.
Drug Plan Coverage Rules
Medicare drug plans may have the following coverage rules:
- Prior authorization-You and/or your prescriber must contact the drug plan before you can fill certain prescriptions. Your prescriber may need to show that the drug is medically necessary for the plan to cover it.
- Quantity limits-Limits on how much medication you can get at a time.
- Step therapy-You must try one or more similar, lower cost drugs before the plan will cover the prescribed drug.
If you or your prescriber believe that one of these coverage rules should be waived, you can ask for an exception.
Medication Therapy Management Programs for Complex Health Needs
If you're in a Medicare drug plan and you have complex health needs, you may be eligible to participate in a Medication Therapy Management (MTM) program. These programs help you and your doctor make sure your medications are working.
MTM programs include a free discussion and review of all of your medications by a pharmacist or other health professional to help you use them safely. You'll get a summary of this discussion to help you get the most benefit from your medications. You may want to bring this summary when you talk with your doctors or other health care providers.
Participate in an MTM Program
If you take many medications for more than one chronic health condition, contact your drug plan to see if you're eligible.
