Medicare Stew – Part 2: What is Medicare Part D

 The Medicare Stew Series continues with a helping of what Medicare Part D covers.  

Medicare Part D is coverage to help folks pay for Prescription Drugs. Plans are offered by private insurance companies approved by Medicare.  Adding a Part D plan to Original Medicare expands your healthcare coverage. These plans are relatively new to Medicare as the ability to enroll in them only went into effect January 2006.

To qualify for a Part D plan, you must be enrolled in Parts A and B of Medicare. 

There is an enrollment sticky point with this part of Medicare. While Medicare doesn’t call enrolling in Part D mandatory, folks who miss certain enrollment periods could end up with lifelong penalties.

Wait! What? 

This means if you are already 65 and on an employer plan that is creditable, you already have your medications covered. (Your employer plan must have drug coverage at least as good as Medicare). You can then defer your Part D coverage along with Parts A and B. But if you are not on a creditable plan, and turning 65, you need to get Part A, Part B, and Part D. Your initial enrollment period is when you are turning 65. If you miss the enrollment at this time, a penalty may apply later when you do go to enroll.  

You can enroll in a Part D plan with Original Medicare, or obtain the coverage through a Medicare Advantage plan that has the drug coverage included. (We will go over only the stand-alone Part D plans with Original Medicare for now.)

Part D plans are geography-specific. That means plans must be selected based on the area a person resides in. Plans may not be offered in all parts of the nation. So when a person enrolls in a plan and moves to another location (state or county) they might need to change their prescription drug plan for coverage in their new location. 

Since the Drug plans are offered by private insurance companies, how the coverage and costs apply for the medications you are taking can differ. All prescription drug plans must give at least a standard level of coverage determined by Medicare. So folks will need to compare the all the plans available to them. Compare what and how they cover medications, premiums, and which pharmacies they can go to. Keep in mind,  these plans generally change all of that information every year. Similar to when the drug formularies changed with employer group plans.

Just like employer group plans, which drugs are covered, how they are covered, and premium costs can change every year. It is recommended that folks on Medicare Prescription Drug plans review their plans every year to identify changes that might impact them. Medicare’s Annual Enrollment Period (AEP) that starts October 15th to December 7th is the time changes can be made to Medicare Part D. We review all of our client’s prescription drug plans during this period and guide them on options to consider. If you are not working with an advisory firm that provides an annual review for folks you know on Medicare, call us. We are here to help.

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