Medicare Part D Plans
Medicare Part D plan is an optional prescription drug insurance for your medication needs. When you enroll in Medicare Part D, you get a prescription card to reduce the cost of brand-name and generic drugs. Instead of paying the full cost of your prescriptions, you pay only the copays required by your drug plan. There are two ways you can add prescription drug coverage to your Medicare health coverage:
- Medicare Prescription Drug Plans (sometimes called “PDPs”) add prescription drug coverage to Original Medicare. In addition, you can add drug coverage to some Medicare Private Fee-For-Service (PFFS) plans, some Medicare Cost Plans, and Medicare Medical Savings Account (MSA) plans.
- Medicare Advantage Plans (like HMO or PPOs) or other Medicare health plans offer prescription drug coverage.
To join a Medicare Prescription Drug Plan, you must have Medicare Part A (Hospital Insurance) or Medicare Part B (Medical Insurance). To join a Medicare Advantage Plan, you must have both Part A and Part B. In addition, you must also live in the service area of the Medicare health plan or drug plan you want to join. These plans offer different combinations of coverage and cost sharing. For example, Medicare drug plans may differ in the prescription drugs they cover, the price you pay, and the pharmacies you can use.
Related Article: Medicare Parts coverage and cost in 2020
How to Avoid Late Enrollment Penalty
The initial enrollment period for Medicare Part D is the same as the initial enrollment period for Medicare. It begins 3 months before your 65th birthday and ends 3 months afterward. This is when most people enroll in Part D, unless you have credible coverage from an employer or a source like the VA. Although Part D is voluntary, no one knows when you will get sick and need expensive medications. So Medicare encourages your enrollment at age 65 by imposing penalties for late enrollment.
If you do not have other credible drug coverage and you miss enrolling in the 7 month initial enrollment period, you will start accumulating a penalty that grows over time. This late enrollment penalty incurs at 1% of the national average premium for every month you waited. In other words, for every month you could have been enrolled in Part D, but were not. For example, maybe you did not enroll because you are not taking any medications or they are not very expensive. If you were to wait 4 years x 12 months = 48% higher Part D premiums. Furthermore, you pay this penalty for as long as you are enrolled in Medicare Part D.
Fortunately, there are some very affordable drug coverage. So even if you do not need drug coverage right now, you can enroll in an inexpensive plan so you have drug coverage when you need it. Most importantly, so you avoid incurring that late penalty. Moreover, delaying Part D is risky because once your initial enrollment period passes, you can only enroll or switch drug plans during the following enrollment periods:
- Annual Election Period from October 15 to December 1.
- Medicare Advantage Open Enrollment from January 1 to March 31.
The Risks of Late Enrollment
Mr. Anderson had been healthy his entire life and at the time of his Medicare enrollment period was taking no medications. He was advised by his insurance agent to enroll in Medicare Part D. However, he decided to gamble his good health and decided not to enroll in a Medicare Part D plan.
Two years later in August, he had a heart attack and was diagnosed with heart failure. His doctor prescribed a new heart drug, Corlanor, to treat and reduce new heart failures. The cost of this life-saving heart medication is $833 per month. Because he cannot enroll in a drug plan outside of the fall annual election period, Mr. Anderson had to pay the heart drug costs for 5 months. His total spending before his Part D drug plan began the following January costs him $4,166. It’s a medical fact, heart disease kills 647,000 Americans each year – that’s 1 in 4 deaths (cdc.gov). Make sure you have drug coverage because life-saving medications are expensive.
The cost of prescription medications can be quite high. So it is important you understand the risk of not having a Medicare Part D plan. If you miss your enrollment period, you cannot buy a drug plan mid-year without a special circumstance. So imagine if you develop a serious health condition in May and you need a very expensive medication for it. You would pay the full retail cost of that medication until the next Part D annual election period. This means you would need to spend money you may not even have for the next 7 months until January 1st. Including a Medicare Part plan insures you have the prescription drugs you need for your health.
Switching Your Medicare Advantage Plan
If you are in a Medicare Advantage plan, you can change your coverage during Medicare New Enrollment period in 2020: January 1 – March 31, 2020. Any change you make will take effect the month after you submit your enrollment. You have two options:
- Switch from Medicare Advantage to Original Medicare plus a Part D plan
- Switch from one Medicare Advantage plan to another
Keep in mind, you can only switch or change your plan one time between January 1 and March 31, 2020. In other words, once you make a change you can not change it until the next annual fall enrollment period in October.
Find the Right Medicare Part D Plan
Senior Healthcare Direct is happy to help you find the right Drug Plan. Please fill out our Drug Finder Form, and a licensed agent can find you a drug plan that covers your specific list of prescription drugs. Moreover, we compare the prices of all available drug plans, so you get the most cost-effective Part D plan.