Medicare Part D Frequently Asked Questions
Medicare Part D FAQ
Medicare Part D FAQ's
Medicare Part D is the Medicare prescription drug benefit which is offered by private stand-alone prescription drug plans, sometimes called PDPs, and Medicare Advantage plans that cover drugs. If you are covered under traditional Medicare and you want drug coverage, you can enroll in a stand-alone drug plan during the Medicare Open Enrollment period. If you did not sign up for a Part D plan when you got your Part A and Part B coverage and you do not have another source of drug coverage that is at least as good as Part D coverage, be aware that you may be charged a late enrollment penalty. Once you are enrolled in a Part D plan, you can switch drug plans during the Medicare Open Enrollment period.
Anyone entitled to Medicare Part A (whether actually enrolled or not) or who is currently enrolled in Medicare Part B may join Medicare Part D to get help paying prescription drug costs. Enrollment is voluntary except for people who also receive benefits from Medicaid (Medi-Cal in California). If you qualify for Medicaid, the government automatically enrolls you in a Medicare Part D plan through which you will receive your prescription drug coverage.
Even if you aren’t taking any medications right now, it might make sense to enroll in a drug plan so that you have coverage in case your needs change in the future. If you don’t have coverage and the Medicare Open Enrollment period has ended, you won’t be able to sign up for coverage until the next Medicare Open Enrollment period begins, and your coverage wouldn’t take effect until January 1 of the following year. This could put you at risk of paying a lot out of pocket for prescriptions if your needs change. Also be aware that there is a late enrollment penalty for Part D. If you don’t sign up for a Part D plan when you are first eligible to do so, and you decide later you want to sign up, you will be required to pay a late enrollment penalty equal to 1% of the national average premium amount for every month you didn’t have coverage as good as the standard Part D benefit.
To enroll into a Medicare Part D Prescription Drug Plan, you need to have either Medicare Part A or Part B, and you have to live in the service area of the plan you choose. If you’re eligible for Medicare because of age, your seven-month Initial Enrollment Period for Part D usually takes place at the same time as your Initial Enrollment Period for Part B, starting three months before your 65th birthday, including your birthday month, and ending three months later. If you qualify for Medicare through disability, you’ll get a subsequent Initial Enrollment Period for Part D when you turn 65 years of age.
The Medicare Part D late-enrollment penalty may apply if you enroll any time after your Initial Enrollment Period for Part D and go without creditable prescription drug coverage for more than 63 days in a row. If you don’t enroll in Medicare Part D when you’re first eligible, your next opportunity will be during the Annual Election Period that occurs from October 15 to December 7 of every year. During this time, you can enroll into a stand-alone Medicare Prescription Drug Plan if you have Original Medicare or get drug coverage through a Medicare Advantage Prescription Drug plan. You can also use this period to switch plans or disenroll from your plan.
You’re not required to enroll into a Medicare Part D Prescription Drug Plan. However, if you go without creditable prescription drug coverage for 63 or more days in a row after you’re first eligible , you may have to pay a late-enrollment penalty if you enroll into a Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan later.
There are four types of costs associated with Medicare Part D prescription drug coverage: premiums, deductibles, copayments, and a coverage gap during which period you must pay the full cost of your medications. People with low incomes may apply for a subsidy from the Social Security Administration to reduce these costs.
Part D premiums range from $10-$100 per month (depending on the plans available in your area and on the particular plan you choose). The maximum deductible—the amount you must pay out-of-pocket before Medicare will contribute to your prescription costs—in 2020 is $435. After you meet the deductible, Medicare will pay roughly 75% of your prescription costs.
After you and your plan together pay a certain amount for covered generic prescription drugs ($4,020 in 2020), your plan stops paying and you must pay the full cost of the prescription. The plan begins to pay again—and pays 95% of all further costs—when total expenditures reach a “catastrophic” level ($6,350 in 2020).
However, you will receive a discount on the cost of your medications while you are in the coverage gap.
Low-income Medicare beneficiaries may qualify for a subsidy to help pay costs associated with Part D plans. This subsidy is called Extra Help. Also, under certain circumstances, the copayment for prescriptions may be waived or reduced.
You may qualify for a low-income Part D subsidy if:
- you are eligible for Medicaid, or
- your income is less than 150% of the federal poverty level and your assets, not including your own home, are less than $14,390 ($28,720 for a married couple).
In addition to low-income subsidies, circumstances exist in which a Part D plan enrollee may not have to pay the normal copayment for a covered drug. These include:
- People who live in a long-term care nursing facility, and who are enrolled in both Medicare Part D and Medicaid, have no copayments.
- Some plans waive or reduce copayments for certain drugs, particularly generic versions, to coax people to join that particular plan. But the plan can change this copayment waiver at any time.
- Pharmacies may waive copayments for any enrollee with a low-income subsidy, for any drug. But the waiver is not automatic; you have to ask for it.
No, each plan may have a unique list of covered drugs. The list of covered drugs is known as a formulary. Medicare requires all Medicare Part D plans to cover at least two medications in each therapeutic category/class approved by Medicare. The drugs within the formulary are assigned to tiers. The tier determines the co-payment or out-of-pocket costs a person within the plan will pay for the drug. If you take a medication that is not covered on your Part D plan’s formulary, you will pay full retail price.
If you have health insurance in addition to Medicare, this might include creditable drug coverage. The plan must tell you each year whether or not the prescription drug coverage is creditable, meaning it covers at least as much, on average, as Medicare’s standard prescription drug coverage does. Some common examples of creditable coverage include (but are not limited to) health insurance from:
- Employer group coverage or union plans
- United States Department of Veterans Affairs (VA)
- Indian Health Service (IHS)
You can continue to use this prescription drug coverage alongside your Medicare benefits without penalty, as long as it’s creditable.
If you’ve gone 63 consecutive days without creditable prescription drug coverage, either because you didn’t enroll when you were first eligible or because you lost your creditable coverage and didn’t get new coverage in time, then you may have to pay a late-enrollment penalty when you do enroll into Medicare Part D.
The Medicare Part D late-enrollment penalty is added to the premium of the Part D Prescription Drug Plan you enroll into. Your Medicare Prescription Drug Plan determines this penalty by first calculating the number of uncovered months you were eligible for Medicare Part D, but didn’t enroll into a Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan. Your Medicare Prescription Drug Plan will then ask you if you had creditable prescription drug coverage during this time. If you didn’t have creditable drug coverage for 63 or more days in a row after you were first eligible, the Medicare Prescription Drug Plan must report the number of uncovered months to Medicare.
For example, let’s say you disenrolled from your Medicare Prescription Drug Plan effective February 28, 2019, and then decided to enroll in another Medicare Prescription Drug Plan during the Annual Election Period, with an effective date of January 1, 2020. This means you didn’t have creditable drug coverage from March 2019 through December 2019, which adds up to 10 uncovered months.
Currently, the late-enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2020) times 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. This number is then rounded to the nearest $.10 and added to your Medicare Prescription Drug Plan monthly premium cost. The “national base beneficiary premium” may increase each year, so the total of your late-enrollment penalty can also increase each year.
While you can’t entirely avoid the coverage gap by switching plans, some plans do offer some additional coverage in the gap beyond what all plans are required to offer. And the coverage gap is gradually being phased out in all Part D plans. In 2019, you will get coverage of at 75% of your brand-name drug costs in the gap and 63% of your generic drug costs, no matter what plan you choose. But Medicare drug plans differ in other ways that can have a big impact on your out-of-pocket costs, including monthly premiums, the list of drugs covered by each plan, how much the plan charges for preferred and non-preferred drugs, and how much the plan charges for high-cost specialty drugs. Not everyone will save money by switching plans, but it generally makes sense for everyone to compare their plan options each year to see if there is a less expensive option for the coverage you need.
Enrolling in a new drug plan during the Medicare Open Enrollment period will disenroll you from your previous plan, so you don’t need to contact the previous plan to drop that coverage. You should notify the pharmacy where you fill your prescriptions so they can update their records with your new plan information.
You can submit a new application for a plan other than the one to which you initially applied during the Medicare Open Enrollment period. Keep in mind that the last plan application you submit before the Medicare Open Enrollment period ends on December 7 is the coverage that will take effect on January 1 of the following year.
No. Drug coverage from the VA (Veterans Affairs) is considered creditable prescription drug coverage, which means the coverage is at least as good as what Medicare drug plans provide, so you do not need to enroll in a Medicare Part D plan. Other sources of creditable drug coverage include the Federal Employee Health Benefits (FEHB) program, TRICARE (military health benefits), and Indian Health Services (IHS). People with creditable coverage should receive a notice from the source of that coverage letting you know that your coverage is, in fact, creditable. You should keep this notice in case you need to show proof that you had creditable coverage if you decide later you want Medicare prescription drug coverage.