Medicare and Prescription Drug Coverage from an Employer

Pamela Cannaday by Pamela Cannaday | Licensed since 2011
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This article was updated on: 10/21/2018

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When they turn 65, many people are automatically enrolled in Original Medicare, Part A and Part B, which generally doesn’t include prescription drug coverage. If you’re covered by an employer or union plan that includes prescription drug coverage, you may be able to keep it when you enroll in Medicare. If you’re covered by an employer, you might still want to enroll in Medicare Part A when you turn 65, because it won’t cost you anything if you’ve worked and paid federal taxes for at least 10 years. However, you may want to delay your Part B enrollment, as Part B comes with a monthly premium.

Stand-alone Medicare Part D Prescription Drug Plan Coverage

Medicare prescription drug coverage is available as a stand-alone Medicare Part D Prescription Drug Plan to go alongside your Original Medicare benefits. To enroll in a stand-alone prescription drug plan you only need to be enrolled in Part A or Part B. This might be a good option for someone who has employer coverage without prescription drug benefits and has delayed enrollment in Medicare Part B.

Medicare Advantage Prescription Drug Coverage

Another way you can get prescription drug coverage is through part of a Medicare Advantage plan. Medicare Advantage is another way to get your Part A and Part B benefits and requires that you’re first enrolled in Medicare Part A and Part B. Medicare Advantage must cover everything that Original Medicare (Part A and Part B) covers except hospice care, which Part A still covers. Medicare Advantage plans often offer extra benefits, such as prescription drug coverage, routine vision, and dental. With a Medicare Advantage plan you must still pay your Part B premium as well as any premium the plan requires. When you’re first eligible for Medicare, prescription drug coverage is optional, but if you don’t purchase it, you might face a Medicare Part D late-enrollment penalty if you sign up for it later if you don’t have other credible coverage.

If you have an insurance plan, such as an employer plan, that covers medications, you might not encounter the late-enrollment penalty.

  • You’ll need to know whether or not your current prescription drug coverage is considered to be “creditable coverage” — coverage that’s expected to pay, on average, as much as Medicare Part D does. Your insurance company should send you a “Notice of Creditable Coverage” every year in September. You can also contact the plan to find out if your current coverage is creditable.
  • If your current coverage is not creditable, and you enroll in a Medicare Part D plan, Medicare might assess a penalty. The penalty begins after any continuous period of 63 days or more after your Medicare Initial Enrollment Period that you go without credible prescription drug coverage.
  • If you’re covered by creditable prescription drug coverage as described above, you can keep the plan as long as you’re still eligible for it. If you decide to drop the policy, you can sign up for a Medicare Prescription Drug Plan, or a Medicare Advantage Prescription Drug plan. You usually have two months after your current coverage ends to get Medicare prescription drug coverage. After two months, in most cases, your Special Enrollment Period for special circumstances ends.
  • If you lose your creditable drug coverage through no fault of your own, you have two months after your current coverage ends (or after the plan tells you the coverage is no longer creditable) to get Medicare prescription drug coverage.

Make sure you don’t go 63 or more days in a row without creditable prescription drug coverage, or the late-enrollment penalty may apply if you sign up for this benefit later.

If you’re interested in finding out more about your Medicare coverage options, I can help you with that. If you’d prefer to arrange a phone call with me, or request that I send you information by email, simply use the links below. The Find Plans button on this page will help you research Medicare plan choices in your area.

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