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Medicare Part D (Prescription Drug Coverage)

Medicare offers prescription drug coverage to everyone with Medicare. Even if you don’t take many prescriptions now, you should consider joining a Medicare drug plan. If you decide not to join a Medicare Part D drug plan when you’re first eligible, and you don’t have other creditable prescription drug coverage, you’ll likely pay a late enrollment penalty if you join a plan later. Generally, you’ll pay this penalty for as long as you have Medicare prescription drug coverage. To get Medicare prescription drug coverage, you must join a plan approved by Medicare to offer Medicare drug coverage. Each plan can vary in cost and specific drugs covered.

Two Ways To Get Medicare Prescription Drug Coverage

1. Medicare Part D 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. You must have Part A or Part B to join a Medicare Part D Prescription Drug Plan.

 

2. Medicare Advantage Plans (like HMOs or PPOs) or other Medicare health plans that offer Medicare prescription drug coverage. You get all of your Part A, Part B, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” Remember, you must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage.

 

When Can I Join, Switch, Or Drop A Medicare Part D Drug Plan?

When you first become eligible for Medicare, you can join during your Initial Enrollment Period.

If you get Part B for the first time during the General Enrollment Period, you can also join a Medicare Part D drug plan.

During Open Enrollment, between October 15–December 7 each year. Your coverage begins on January 1 of the following year, as long as the plan gets your request during Open Enrollment.

At any time if you qualify for Extra Help.

 

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 Part D drug plans at other times. Some examples are if you:

Move out of your plan’s service area.

Lose other creditable prescription drug coverage.

Live in an institution (like a nursing home).

Have Medicaid.

Qualify for Extra Help

Important! If you have a Medicare Advantage Plan
If your Medicare Advantage Plan includes prescription drug coverage and you join a Medicare Prescription Drug Plan, you’ll be disenrolled from your Medicare Advantage Plan and returned to Original Medicare.

 

Coverage Gap

Most Medicare Part D drug plans have a coverage gap (also called the “donut hole”). The coverage gap begins after you and your drug plan together have spent a certain amount for covered drugs. In 2016, once you enter the coverage gap, you pay 45% of the plan’s cost for covered brand-name drugs and 58% of the plan’s cost for covered generic drugs until you reach the end of the coverage gap. Not everyone will enter the coverage gap because their drug costs won’t be high enough.

These items all count toward you getting out of the coverage gap:

Your yearly deductible, coinsurance, and copayments

The discount you get on covered brand-name drugs in the coverage gap

What you pay in the coverage gap

 

What's The Medicare Part D Late Enrollment Penalty?

The late enrollment penalty is an amount that’s 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’s a period of 63 or more days in a row when you don’t have Part D or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Medicare Part D coverage.

 

The cost of the late enrollment penalty depends on how long you didn’t have creditable prescription drug coverage. Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.13 in 2015) by the number of full, uncovered months that 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. Since the “national base beneficiary premium” may increase each year, the penalty amount may also increase each year. In most cases, you have to pay this penalty for as long as you have a Medicare drug plan, even if you switch plans. After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be.

 

3 Ways To Avoid Paying A Penalty

1. Join a Medicare drug plan when you’re first eligible. Even if you don’t take many prescriptions now, you should consider joining a Medicare drug plan to avoid a penalty. You may be able to find a plan that meets your needs with little to no monthly premiums.

2. 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 coverage. Your plan must tell you each year if your drug coverage is creditable coverage. This information may be sent to you in a letter, benefit handbook, or included in a newsletter from the plan. Keep this information, because you may need it if you join a Medicare drug plan later.

3. Tell your plan about any drug coverage you had if they ask about it. When you join a Medicare drug plan, and the plan believes you went at least 63 days in a row without other creditable prescription drug coverage, the plan will send you a letter. 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 date listed on the form. If you don’t tell the plan about your creditable prescription drug coverage, you may have to pay a penalty for as long as you have Part D coverage.

medicare part d icon

Medicare Part D (Prescription Drug Coverage)

Medicare offers prescription drug coverage to everyone with Medicare. Even if you don’t take many prescriptions now, you should consider joining a Medicare drug plan. If you decide not to join a Medicare Part D drug plan when you’re first eligible, and you don’t have other creditable prescription drug coverage, you’ll likely pay a late enrollment penalty if you join a plan later. Generally, you’ll pay this penalty for as long as you have Medicare prescription drug coverage. To get Medicare prescription drug coverage, you must join a plan approved by Medicare to offer Medicare drug coverage. Each plan can vary in cost and specific drugs covered.

Two Ways To Get Medicare Prescription Drug Coverage

1. Medicare Part D 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. You must have Part A or Part B to join a Medicare Part D Prescription Drug Plan.

 

2. Medicare Advantage Plans (like HMOs or PPOs) or other Medicare health plans that offer Medicare prescription drug coverage. You get all of your Part A, Part B, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” Remember, you must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage.

 

When Can I Join, Switch, Or Drop A Medicare Part D Drug Plan?

When you first become eligible for Medicare, you can join during your Initial Enrollment Period.

If you get Part B for the first time during the General Enrollment Period, you can also join a Medicare Part D drug plan.

During Open Enrollment, between October 15–December 7 each year. Your coverage begins on January 1 of the following year, as long as the plan gets your request during Open Enrollment.

At any time if you qualify for Extra Help.

 

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 Part D drug plans at other times. Some examples are if you:

Move out of your plan’s service area.

Lose other creditable prescription drug coverage.

Live in an institution (like a nursing home).

Have Medicaid.

Qualify for Extra Help

Important! If you have a Medicare Advantage Plan
If your Medicare Advantage Plan includes prescription drug coverage and you join a Medicare Prescription Drug Plan, you’ll be disenrolled from your Medicare Advantage Plan and returned to Original Medicare.

 

Coverage Gap

Most Medicare Part D drug plans have a coverage gap (also called the “donut hole”). The coverage gap begins after you and your drug plan together have spent a certain amount for covered drugs. In 2016, once you enter the coverage gap, you pay 45% of the plan’s cost for covered brand-name drugs and 58% of the plan’s cost for covered generic drugs until you reach the end of the coverage gap. Not everyone will enter the coverage gap because their drug costs won’t be high enough.

These items all count toward you getting out of the coverage gap:

Your yearly deductible, coinsurance, and copayments

The discount you get on covered brand-name drugs in the coverage gap

What you pay in the coverage gap

 

What's The Medicare Part D Late Enrollment Penalty?

The late enrollment penalty is an amount that’s 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’s a period of 63 or more days in a row when you don’t have Part D or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Medicare Part D coverage.

 

The cost of the late enrollment penalty depends on how long you didn’t have creditable prescription drug coverage. Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.13 in 2015) by the number of full, uncovered months that 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. Since the “national base beneficiary premium” may increase each year, the penalty amount may also increase each year. In most cases, you have to pay this penalty for as long as you have a Medicare drug plan, even if you switch plans. After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be.

 

3 Ways To Avoid Paying A Penalty

1. Join a Medicare drug plan when you’re first eligible. Even if you don’t take many prescriptions now, you should consider joining a Medicare drug plan to avoid a penalty. You may be able to find a plan that meets your needs with little to no monthly premiums.

2. 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 coverage. Your plan must tell you each year if your drug coverage is creditable coverage. This information may be sent to you in a letter, benefit handbook, or included in a newsletter from the plan. Keep this information, because you may need it if you join a Medicare drug plan later.

3. Tell your plan about any drug coverage you had if they ask about it. When you join a Medicare drug plan, and the plan believes you went at least 63 days in a row without other creditable prescription drug coverage, the plan will send you a letter. 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 date listed on the form. If you don’t tell the plan about your creditable prescription drug coverage, you may have to pay a penalty for as long as you have Part D coverage.