What is Medicare Part D Prescription Drug Program?
- It is insurance that helps seniors cover the costs of their prescription medications making them more affordable. Private insurance companies that are approved by Medicare manage Medicare Part D Plans. These plans are often called “PDP” meaning Prescription Drug Plan.
How do you receive Medicare Part D benefits?
- One way to sign up for Part D drug plans is through an agency like ours, Supplement Plan Advisors. It does not cost more to have us working with you. You can add a “stand-alone” drug plan to Original Medicare or a Medical Savings Account (MSA). Another way is to have a Medicare Advantage Plan where the Medicare Part D Plan is included. These plans are often called Medicare Prescription Drug Plans (MAPD) or “Part C Plans”. MAPD plans can include both Medical and Prescription drug coverage rolled up into one plan. Some Medicare Cost Plans, Medicare Private Fee-for-Service (PFFS) Plans or Medicare Preferred Provider Organizations (PPO) Plans include Part D drug benefits. We will help you find the best suited plan for you.
How do Medicare Part D Plans work?
- There are three phases to the “standard” Medicare Part D plans. The Centers for Medicare and Medicaid Services (CMS) has specific guidelines for private insurance companies, and they must offer plans with benefits as good, or better than the outline of coverage below:
- Initial Coverage Phase for 2021: once you have satisfied the $445 deductible, Part D picks up 75% of the cost of the prescriptions until your total costs for the year reaches $4,130 in 2021.
- Coverage Gap (Donut Hole): You will pay 25% for brand or generic drugs in the gap. Once the total prescription cost for the year reaches $6,550 on your out-of-pocket spending, then that is the end of the Coverage Gap. Not everyone will enter the Coverage Gap.
- Catastrophic Coverage: While in the catastrophic phase you will pay only 5% of the cost of your prescriptions.
When should you enroll in Medicare Part D?
- The timing for enrollment is typically when you turn age 65, called the “Initial Enrollment Period” (IEP) for a standalone drug plan or the “Initial Coverage Election Period” (ICEP) when electing a Medicare Advantage Prescription Drug Plan (Part C plan). You should also enroll when you are starting Social Security Disability Insurance (SSDI) in Medicare Part A and Part B coverage. If you are over age 65 and coming off a creditable employer group health plan you would get a Special Enrollment Period (SEP) to apply for drug coverage.
- If you do not have creditable drug coverage you should apply for coverage during your seven-month Initial Enrollment (IEP). IEP is 3 months before you turn age 65, the month you turn age 65, and 3 months after.
- If you have creditable drug coverage you do not need to enroll in a Part D drug plan. An example of creditable drug coverage is if you have Veterans Drug Benefits or group health insurance through your employer. If you lose your creditable coverage in the future, then you will be entitled for a Special Enrollment Period (SEP) for 63 days to enroll in a drug plan and avoid late enrollment penalties.
- If you missed your Part B and D enrollment deadline, you may enroll in Medicare Part B during the General Enrollment Period (January 1st to March 31st). Part B would then start for you on July 1st. You would then be able to enroll in a Part D Drug Plan 3 months prior to the July 1st start date.
What is the Part D Late Enrollment Penalty?
- The Law says that if you go for more than 3 months after going on Medicare A and/or B; or 63 days without Part D after leaving group health coverage, you will get a late enrollment penalty. The penalty is 1% each month which is based on the national drug plan premium average. In 2021, the base beneficiary premium is $33.06 therefore; the penalty is .33 cents for each month without Part D Rx coverage, or $3.97 per year in 2021. If you get a late enrollment penalty, this is added to your monthly premium once you eventually get a Drug Plan. This penalty is permanent and increases the longer you go without a Part D plan. If a beneficiary qualifies for the low-income subsidy then they do not pay the penalty. Our Team at Supplement Plan Advisors can help you know if you qualify for extra help.
The information contained on this web page is provided for educational and informational purposes only. While we have taken every precaution to ensure that the content of this page is current and accurate, errors can occur. Supplement Plan Advisors LLC assumes no responsibility for any errors or omissions in the content of this page. Sources: Medicare.Gov & SSA.Gov