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Medicare
Part D

What is Medicare Part D (Prescription Drug Benefit)?

Medicare Part D is a voluntary outpatient prescription drug benefit for people with Medicare, provided through private plans approved by the federal government. Beneficiaries can choose to enroll in either a stand-alone prescription drug plan (PDP) to supplement traditional Medicare or a Medicare Advantage prescription drug plan (MA-PD), mainly HMOs and PPOs, that cover all Medicare benefits, including drugs. In 2020, 46 million more than 60 million people covered by Medicare were enrolled in Part D plans.

How Medicare Part D Works

Medicare offers two ways to get prescription drug coverage—Part D and Medicare Advantage. Medicare Part D is one component of the overall Medicare program, a national health insurance program.

While Medicare extends to various medical treatments, Part D is explicitly focused on making drug prices more affordable for Americans 65 years and older.

People already covered by Medicare generally can opt-in to Medicare Part D. If you do, you will be charged the exact costs found with standard insurance plans, such as monthly premiums, annual deductibles, and copays. However, in exchange, you get additional coverage for prescription drugs compared to what is already offered by the broader Medicare program. For this reason, it’s up to you to choose whether subscribing to Medicare Part D makes economic sense, given your health needs and financial circumstances.

How much does it cost?

You’ll make these payments throughout the year in a Medicare drug plan:

A) Premium

B) Yearly deductible

C) Copayments or coinsurance

D) Costs in the coverage gap

E) Costs if you get Extra Help

F) Costs if you pay a late enrollment penalty

Your actual drug coverage costs will vary depending on:

A) Your prescriptions and whether they’re on your plan’s list of covered drugs  (formulary).

B) What “tier” the drug is in.

C) The drug benefit phase you’re in (like whether you’ve met your deductible or if you’re in the catastrophic coverage phase).

D) The pharmacy you use (whether it offers preferred or standard cost-sharing, is out of network, or is mail order). Your out-of-pocket drug costs may be less at a preferred pharmacy because it has agreed with your plan to charge less.

E) Whether you get extra help paying your drug coverage costs.

Medicare Part D Insurance FAQs

Who Can Get Medicare Part D Drug Coverage?

Everyone with Medicare can get prescription drug coverage. This includes people who are 65 years or older and who are U.S. citizens or permanent residents, and people under 65 with certain disabilities, including End-Stage Renal Disease (ESRD) and amyotrophic lateral sclerosis (Lou Gehrig’s Disease).

How Do Medicare Drug Plans Work?

After you join a Medicare drug plan, the plan provider will mail you membership materials, including a card to use when you get your prescriptions filled. When you use the card, you may have to pay a copayment, coinsurance, and/or deductible if any are charged by the plan.

Choosing Medicare Prescription Drug Coverage

Joining a Medicare drug plan when you are first eligible means you won’t have to pay a late-enrollment penalty.

From October 15 to December 7 you may switch to a different Medicare drug plan if your plan coverage changes or your needs change. When you join or switch to a new Medicare drug plan, your coverage will generally begin on January 1 of the following year.

When Can You Join, Switch, or Drop a Medicare Drug Plan?

You can join, switch, or drop a Medicare Part D Drug Plan at these times:

  • When you first become eligible for Medicare (3 months before you turn age 65 to 3 months after the month you turn age 65)
  • Your Medicare coverage begins 24 months after you get Social Security or Railroad Retirement Board (RRB) disability benefits. During the 7-month period that starts 3 months before your 25th month of getting Social Security or RRB disability benefits and ends 3 months after your 25th month of getting disability benefits.
  • From October 15-December 7. Your coverage will begin on January 1 of the following year.
  • At any time if you qualify for extra help. This includes people who have Medicare and Medicaid, belong to a Medicare Savings Program, get Supplemental Security Income (SSI) benefits (but not Medicaid), and those who apply and qualify. In certain situations, you may be able to join, switch, or drop Medicare drug plans at other times (like if you move out of the service area or live in an institution).
  • Each year, you have a chance to make changes to your Medicare Advantage or Medicare prescription drug coverage for the following year. There are 2 separate enrollment periods each year. During the open enrollment period (October 15-December 7, 20XX) for Medicare Advantage and Medicare PDP, you can make multiple types of changes to your plan, including signing up for the first time, dropping coverage, or switching between plans. If you want to disenroll from your Medicare Advantage plan and switch to Original Medicare , the time frame for that is January 1-February 14, 20XX. If you switch to original Medicare, you’ll have until February 14, 20XX to add a Medicare PDP. During this time frame you cannot Switch from Original Medicare to a Medicare Advantage Plan, switch from one Medicare Advantage Plan to another, switch from one Medicare Prescription Drug Plan to another, join, switch, or drop a Medicare Medical Savings Account (MSA) Plan.
  • The Health Insurance Marketplace Open Enrollment period (October 1, 20XX – March 31, 20XX) overlaps with the Medicare Open Enrollment period (October 15 – December 7, 20XX). If you have Medicare, make sure that you’re reviewing Medicare plans and not Marketplace options. You don’t need to do anything with the Marketplace during Open Enrollment.

How Do You Switch Your Medicare Drug Plan?

You may change your Medicare Depending on your circumstances, you can switch to a new Medicare drug plan by simply joining another drug plan during one of the times listed above. You don’t need to tell your old Medicare drug plan you are leaving or send them anything. You will be disenrolled automatically from your old Medicare drug plan when coverage in your new drug plan begins. You should get a letter and enrollment information from your new plan provider in the mail. Don’t give personal information to plans that call you unless you’re already a member of the plan.

What Is the Medicare Part D Late-Enrollment Penalty?

If you don’t join a Medicare drug plan when you are first eligible for Medicare Part A and/or B and you go without creditable prescription drug coverage for 63 continuous days or more, you may have to pay a late-enrollment penalty to join a plan later. This penalty amount changes every year, and you will have to pay it as long as you have Medicare prescription drug coverage.

Medicare overall is not easy to understand, and you need to consider many factors before finalizing which one is the right fit for you. Our experts can help guide you. Talk to us today to know more.

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