How Does Medicare Part D Work?
Understanding Medicare
"Part D" Drug Plans
Medicare Part D drug plans are sold by private insurance companies and are available to everyone on Medicare. They help to pay for prescription medications, helping to keep your out-of-pocket costs down while ensuring they get the drugs they need.
Since prescription coverage doesn’t come with original Medicare or most Medicare Supplement plans, Part D coverage is a must for most Medicare-eligible people.
There are two options for Medicare enrollment. Those who have original Medicare and medicare supplement insurance plans can enroll in standalone Part D plans. Enrollees can also get prescription drug coverage by enrolling in a Medicare Advantage plan.
Original Medicare Enrollees
Original Medicare combined with a Medicare Supplement plan provides coverage for hospitalizations, doctor visits, and other needs, but it doesn’t cover prescription drugs. A standalone Part D plan will fill in this gap. Original Medicare enrollees can choose Part D plans independently, and can even use different insurance carriers. This flexibility allows them to find lower prices on prescription medication coverage.
Medicare Advantage Plan Enrollees
The Medicare Advantage plan, sometimes referred to as Part C, comes with built-in prescription drug coverage. These plans are similar to private insurance plans where one insurance company provides for all of a patient’s needs. Medicare Advantage plans don’t offer the same flexibility as original Medicare with supplement coverage, but some people find them easier to understand.
Initial Enrollment Period
The initial enrollment period for Part D lasts for seven months. It starts three months before someone turns 65 and ends three months after his/her birth month. So, if someone turns 65 on March 15, his or her initial enrollment period would last from January 1 through June 30.
Annual Enrollment Period
The annual enrollment period is the same for all Medicare beneficiaries. It lasts from October 15 through December 7. During this period, people can enroll in Part D drug plans or switch their Medicare coverage without incurring any penalties. The new plan will go into effect on January 1st.
Special Election Period
Some people may be able to enroll in Part D during what are known as special election periods. Eligible people include those who have recently left a group health insurance plan and people who have moved to different areas that are not covered by their current plans.
How Does Medicare Part D Work
Since Medicare Part D plans are sold through private insurance companies, they’re all a little different. Each company keeps a list of covered drugs, referred to within the industry as a formulary. The prescription drugs in this formulary are placed in different tiers, each of which has a different co-pay. The lowest-tier drugs will cost the least, while the highest-tier drugs will come with higher co-pays.
Every patient takes different medications and has different coverage needs, so it’s wise to investigate options before choosing a Part D insurance provider. It’s also relevant to note that insurance companies can make changes to their prescription drug formularies throughout the year, but that Medicare regulates those changes by providing strict guidelines.
Part D insurance providers may charge more or less for their plans depending on their drug formularies. This can get a little confusing for consumers who know what they need but don’t want to sort through endless paperwork.
The best way to figure out which formulary will offer appropriate coverage is to discuss options with a licensed health insurance agent who has experience working with Part D enrollment. Call a local city, Vermont Insurance Agent to get any questions answered today.
Avoiding Penalties
Medicare strongly encourages all Medicare-eligible people to enroll in Part D plans as soon as they switch to Medicare insurance. This strong encouragement comes in the form of a late penalty for those who choose not to enroll immediately. That means if a person decides not to enroll in a Part D plan when starting out on Medicare, then later decides to add this extra coverage, he or she may be required to pay a fee in the amount of 1% per month for every month the patient waited to enroll.
Most states have low-cost Part D coverage options for those who don’t take prescription drugs that will act as a safety net to help them avoid penalties. This is a good option for Medicare enrollees who don’t need drug coverage yet but expect to in the future..
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