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Medicare Part D — Prescription Drug Coverage

Adriana Anderson by Adriana Anderson | Licensed since 2009
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This article was updated on: 01/13/2017

Medicare Coverage Basics

What is Medicare Part D prescription drug coverage?

As a Medicare beneficiary, you don’t automatically get Medicare Part D prescription drug coverage. This Medicare Part D coverage is optional, but can be valuable if you take medications. If you don’t sign up for Medicare Part D Coverage when you’re first eligible, you might have to pay a late-enrollment penalty if you decide to enroll later.

Many people are automatically enrolled in Original Medicare, Part A and Part B, when they reach 65 years of age. But you may not realize that Original Medicare doesn’t cover most of your medications (except those you may receive as a hospital inpatient or, in some cases, outpatient). Medicare Part B covers certain prescription drugs that you get in an outpatient setting, like a doctor’s office. However, these tend to be the kind of medications that you need a doctor to give you, like infusion drugs.

If you want help with most other medication costs, you’ll need to sign up for Medicare Part D coverage.

What types of Medicare Part D Prescription Drug Plans are available?

You can get Medicare Part D prescription drug coverage in two different ways, depending on whether you’re enrolled in Original Medicare or Medicare Advantage. Medicare Advantage, also known as Medicare Part C, is an alternative way to get your Original Medicare benefits through a Medicare health plan, and many plans may also cover benefits beyond the federal program, including prescription drug benefits.

Medicare Part D coverage is available:

  • Through a stand-alone Medicare Part D Prescription Drug Plan—you can add this benefit to your Original Medicare coverage. You can enroll in any Part D Prescription Drug Plan that serves the area where you live.
  • Through a Medicare Advantage Prescription Drug plan—you can get a Medicare Advantage (Part C) plan that includes prescription drug coverage, so that you get all your Medicare benefits under one plan.

Am I eligible for a Medicare Part D Prescription Drug Plan?

You’re eligible for Medicare Part D prescription drug coverage if:

  • You have Part A and/or Part B.
  • You live in the service area of a Medicare Part D Prescription Drug Plan.

Please note that if you decide to get your prescription drug coverage through a Medicare Advantage plan, you must have both Part A and Part B, live in the service area of a Medicare Advantage plan, and (in most cases) cannot have end-stage renal disease (ESRD). Not every Medicare Advantage plan covers prescription drugs, so double check with the plan you’re interested in.

When can I sign up for Medicare Part D coverage?

As mentioned, you don’t have to enroll in Medicare Part D coverage. That decision will not affect the Original Medicare coverage you have, but if you’re currently taking medications, it may be beneficial for you to enroll in a stand-alone Medicare Part D Prescription Drug Plan to get help with your prescription drug costs. Or, you can choose to enroll in a Medicare Advantage Prescription Drug plan (Medicare Part C), which includes your Medicare Part D benefits. If you don’t sign up for Part D, you may have to pay for your medications out of pocket unless you have other insurance.

In addition, it’s a good idea to sign up for Medicare Part D as soon as you’re first eligible. If you choose to enroll later or go 63 consecutive days or more without Medicare Part D prescription drug coverage, you may have to pay a late-enrollment penalty, unless you can show that you had creditable prescription drug coverage during the time you were not enrolled in Part D. Creditable prescription drug coverage is coverage that pays at least as much as Medicare’s standard Part D prescription drug coverage. For example, health coverage you may get through your employer may be considered creditable prescription drug coverage. Your insurance should let you know every year whether your coverage is creditable; if you aren’t sure, you should contact your insurance company to check.

As mentioned, you must first have Medicare Part A and/or Part B to be eligible to enroll in a Medicare Prescription Drug Plan and you must have both Medicare Part A and Part B to enroll in a Medicare Advantage Prescription Drug plan (see the above section for full eligibility details). You’re first eligible to sign up for Medicare Part D coverage during your Initial Enrollment Period (IEP) for Part D, which typically takes place during the same seven-month period as your Initial Enrollment Period for Original Medicare. This is the seven-months that starts three months before you turn 65, includes your birthday month, and ends three months later. A good time to sign up for Medicare prescription drug coverage is usually as soon as you’re enrolled in Original Medicare.

You can also sign up for Medicare Part D coverage during the Annual Election Period (AEP), sometimes called the Fall Open Enrollment or Open Enrollment Period for Medicare Advantage and Medicare prescription drug coverage. This takes place from October 15 to December 7. During this time period:

  • Enroll in a Medicare Part D Prescription Drug Plan or change from one Prescription Drug Plan to another.
  • Disenroll from your Medicare Prescription Drug Plan (if you’re already enrolled in one).
  • Enroll in or switch Medicare Advantage Prescription Drug plans.
  • Disenroll from your Medicare Advantage plan and return to Original Medicare.

After the Annual Election Period is over, you’ll have one more chance to make changes to your Medicare Part D coverage. If you’re enrolled in a Medicare Advantage plan, you can use the Medicare Advantage Disenrollment Period (January 1 to February 14) to disenroll from your Medicare Advantage plan and return to Original Medicare. Then, regardless of whether your Medicare Advantage plan included prescription drug coverage, you can also use this same period to enroll in a stand-alone Medicare Prescription Drug Plan. These are the only changes you can make during this time frame.

In general, you can only enroll in a Medicare Prescription Drug Plan or make changes to your Part D coverage during one of the above periods. However, there are some situations that qualify you for a Special Election Period (SEP), when you can enroll in a Medicare Part D Prescription Drug Plan or a Medicare Advantage Prescription Drug plan outside of the Annual Election Period. Some examples of situations that may qualify you for a Special Election Period include, but aren’t limited to, moving outside of your plan’s service area or qualifying for Medicaid. An SEP can take place any time of the year that you have a qualifying situation. If you aren’t sure whether you have a situation that applies, feel free to call us at the phone number on this page; a licensed insurance agent would be happy to help you figure out what your options may be.

What’s the Medicare Part D coverage gap (“donut hole”), and how can I avoid it?

The coverage gap (or “donut hole”) refers to the point when you and your Medicare Part D Prescription Drug Plan or Medicare Advantage Prescription Drug plan have spent a certain total amount on covered prescriptions; this amount is also known as your initial coverage limit. Once you’ve reached your initial coverage limit, you’re in what’s known as the coverage gap, also known as the “donut hole.”

During this phase of your Part D benefits, you pay a higher portion of your prescription drug costs. After you’ve spent a certain amount, you’ll reach the catastrophic coverage phase, and you’ll pay only a small copayment or coinsurance for your covered medications for the rest of the year.  You can take a look at this article to learn more about the specific costs you may have if you enter the coverage gap, or “donut hole.”

There are a number of things you can do to help reduce your prescription drug costs. For example:

  • Switch to lower-cost medications. Talk to your doctor about using generic and/or over-the-counter prescription drugs and whether these options could work for your condition(s). Many generic drugs work as well as costly brand-name prescriptions, and this could save you money each year and keep you out of the coverage gap.
  • Ask your plan about prescription mail-order programs. They can save you money on medications that you take over a longer period (for example, a 30-day or 90-day supply).
  • If your Medicare plan requires you to use network pharmacies, make sure you fill your prescriptions at pharmacies in your plan’s network or the plan may not cover you. In addition, some plans may have lower cost sharing if you use not just in-network pharmacies, but preferred pharmacies in the plan’s network, so check with your plan whether getting your prescriptions filled at certain pharmacies may save you money.
  • Always use your Medicare plan membership card when you get your medications. When using your card, you may be able to get discounted rates on the prescription drugs you buy, and any money spent on covered medications automatically counts toward your plan’s deductible (if it has one).
  • Look for programs that offer assistance. The National Patient Advocate Foundation or the National Organization for Rare Disorders may have programs that can help with your prescription drug costs. Comprehensive information about federal, state, and private assistance programs in your area is available from the National Council on Aging.
  • Apply for the Extra Help (Low-Income Subsidy) program if you have limited income. Extra Help assists low-income beneficiaries with their prescription drug costs, and, if you’re eligible, you won’t enter the coverage gap. You can learn more and find out if you qualify by contacting the Medicaid program in your state.

What does Medicare Part D cost?

Your actual costs for Medicare Part D prescription drug coverage vary depending on the following:

  • The prescriptions you take, and how often
  • The stand-alone Medicare Part D Prescription Drug Plan or Medicare Advantage Prescription Drug plan you choose
  • Whether you go to a pharmacy in your plan’s network
  • Whether your prescription drugs are on your Medicare Part D plan’s formulary (list of covered drugs)*
  • Whether you get Extra Help paying your Medicare Part D costs (see below for more details)

*Remember that formularies may change at any time. You’ll be notified by your Medicare plan if necessary.

One of the costs you should consider is your monthly premium. Most stand-alone Medicare Part D Prescription Drug Plans and Medicare Advantage Prescription Drug plans charge a monthly premium that varies by plan, so you’ll be responsible for paying that premium. Please note that if you’re enrolled in a Medicare Prescription Drug Plan and are also enrolled in Medicare Part B, you must also continuing paying your Medicare Part B premium. And, if you’re enrolled in a Medicare Advantage plan (with or without prescription drug coverage), you must continue paying your Part B premium, along with any premium for your Medicare Advantage coverage.

In addition to your monthly premium, the costs for your Medicare Part D coverage may include:

  • An annual deductible: This is the amount you pay for your prescriptions before your Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan starts to share in the costs. Deductibles vary by plan, and it may be possible to find one with a $0 deductible amount.
  • A copayment/coinsurance: This is the amount you pay out of pocket each time you buy a prescription; it’s your share of the cost after Medicare has paid its part and you’ve reached your plan’s deductible (if any). A copayment is typically a flat amount that you pay (for example, you may pay a $10 copayment when you fill a prescription), while a coinsurance is a percentage you may owe (for example, you might pay a 10% coinsurance for generic medications). These costs can vary from plan to plan, and also vary depending on drug tiers and which stage of the benefit you are in at the time that you fill the prescription. Medicare Prescription Drug Plans and Medicare Advantage plans with prescription drug coverage place covered medications into different cost tiers, and the prescription drugs in higher tiers tend to cost more than those in lower tiers.

Can I get help with my Medicare Prescription Drug Plan costs if my income is low?

As mentioned, Medicare offers a program called the Low-Income Subsidy, or Extra Help, for eligible people with limited incomes. If you are enrolled in Medicare and meet the income and resource requirements for the program, you may automatically qualify for the Low-Income Subsidy in some cases. If you don’t automatically qualify for the Low-Income Subsidy, you may still apply to find out if you qualify for Extra Help from Medicare. If you do qualify, you’ll get help paying for your Medicare Part D costs, which may include premiums, deductibles, and cost sharing.

You may be automatically eligible for Extra Help if you are in one of the following circumstances:

  • You are entitled to Medicare and get full coverage from a state Medicaid program.
  • You’re enrolled in a Medicare Savings Program.
  • You get Supplemental Security Income (SSI) benefits.

If you automatically qualify for Extra Help but don’t enroll in a Medicare Prescription Drug Plan yourself, Medicare will enroll you in a plan so that you’ll get help paying for your prescription drugs. (Medicare will send you a letter telling you when your coverage begins.) If you want to change Medicare Prescription Drug Plans, you can do so at any time with a Special Election Period. For more information about the Extra Help program, contact your local Social Security office, or call 1-800-MEDICARE (1-800-633-4228). TTY users should call 1-877-486-2048. You can talk to a customer service representative 24 hours a day, seven days a week.

As I said above, the Annual Election Period is one of the times that you can enroll in a Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan or make changes to your prescription drug coverage. However, depending on your situation, you may be to make changes outside of this period with a Special Election Period, and I can help you find out if you’re eligible and tell you about Medicare plan options that may cover your medications.

To get started, you can use the links below to schedule a phone appointment or have me email you Medicare information tailored to your needs. To take a closer look now at Medicare plan options that can cover your prescription needs, use the Compare Plans button on this page. Learn more about me by clicking on the “View profile” link below. Or, to discuss your Medicare needs with a licensed insurance agent, just give us a call to reach me or another licensed insurance agent.

Call Medicare.com’s licensed insurance agents at 1-844-847-2660, TTY users 711; Monday through Friday, 8AM to 8PM ET.

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Adriana Anderson |
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