Medicare Part D facts You need to know before you enroll in a plan
Most people have two to three dozen stand-alone Part D Plans to choose from and many Medicare Advantage Plans that include drug coverage available.
The following video will give you a good overview of the Part D program and some tips on comparing plans so you can choose the best Part D Plan for your circumstances.
What you need to know about Part D
1. Part D is an optional drug program for people enrolled in Medicare Parts A and B. To be eligible for a plan you must also live within that plan’s service area, which is generally a State.
Part D is governed by Medicare and many features of plans are the same from plan to plan. This is known as the Part D Standard Benefit Model.
Plans are good for one calendar year and enrolling in a plan requires that you adhere to strict enrollment periods.
2. In order to understand how plans work you must be familiar with some Part D terminology.
The Part D deductible is the amount you may be required to pay prior to your plan paying any benefit. Some deductibles are as low as $0. You should not enroll in a plan just because it has a low premium.
The initial coverage amount is the amount that you pay when you get your prescription drugs and the amount the plans pays as well. For 2013 this amount is $2970. After that is reached you enter the Part D donut hole.
The donut hole is a coverage gap where you are required to pay more for your drugs. This gap is to close completely by 2020 due to Health Care Reform Legislation.
You currently pay 47.5% for generics and 79% for brand-name drugs while in the donut hole. When you have spent $4750 you leave the donut hole and enter the catastrophic coverage phase.
While in the catastrophic coverage phase you pay very little for your prescription drugs.
Your Part D premium is the amount you pay monthly to have your plan. Premiums can range from as low as $0 in an Advantage Plan to over $100 for a high-end stand-alone plan.
3. You should enroll in a Part D drug plan when you are first eligible to avoid the Part D Late Enrollment Penalty. You have a 7 month window that begins three months from the first day of the month you are Medicare eligible.
You can switch, drop or enroll in a plan during the Annual Election period which begins October 15th and ends December 7th.
There are also Special Enrollment Periods available if you qualify.
4. Comparing Medicare Part D Plans requires a little due diligence on your part. The first rule of comparing plans is to find plans that include all your medications. There are basic and enhanced formularies and all formularies are different. There is no universal Medicare formulary that applies to all plans.
Here’s what you need to compare:
- Part D formulary
- Cost sharing amounts (copays, coinsurance)
- Pharmacy network
- Mail order benefits
5. Be aware that your Part D premiums may not be the same as is published on the Medicare Plan Finder at medicare.gov.
Premiums are now tied to your annual income and if you earn more you will pay a higher monthly premium.
Join Part D
If you are eligible for Medicare there is only one good reason not to join a Part D plan; if you have some other creditable drug coverage.
Not joining a plan when you have no other creditable coverage will result in the Part D Penalty. If you are penalized and later decide to enroll in a plan you will pay more evvey month for as long as you’re enrolled in the Part D program.