- Choosing Medicare products and coverage can be a complicated process.
- Medicare Part D plans are private insurance products that provide coverage for your prescription medications.
- The details of Part D coverage can vary by plan, but Medicare does provide some guidance on basic coverage rules.
- Review all your options and find out the best time to sign up for a Part D plan before choosing one.
- If you decide not to add a Part D plan to your coverage when you first become eligible, you might have to pay penalties later on.
Finding the best Medicare coverage for your needs is a complicated process that can be filled with many choices. If you choose to add prescription drug coverage, this means you need to select a Medicare Part D plan.
Part D plans can be particularly confusing because there are no federal plans, only those offered by private insurance providers. These plans can vary widely in terms of coverage and costs.
Read on to find out more about how to select the best Part D plan for you.
You can sign up for a Medicare Part D plan as soon as you become eligible for Medicare. Even if you don’t need many medications at that time, you may want to sign up for a Part D prescription plan right away.
Aside from special circumstances, you’ll have to pay a late enrollment penalty if you sign up for a Part D plan after you’re first eligible.
To start the process of finding a Part D plan, you may first want to decide if you’re going to stick with original Medicare (Part A and Part B) or if you’re going to choose Medicare Advantage (Part C).
Some Medicare Advantage plans combine parts A and B with optional extra coverage for things like prescriptions.
The following sections provide steps you can take when you’re ready to start shopping for a Part D plan.
1. Know what you need
The first step in choosing a plan once you’ve set up your primary Medicare plan is to consider your needs.
You might not be taking many medications when you first become eligible for Medicare. But ask yourself the following questions to consider your potential needs going forward:
- What health conditions do I have?
- What is my family history?
- What are my individual risk factors?
This may be a discussion you want to have with your primary care provider, as well.
Once you have a good understanding of your overall medication needs, you can think of specific needs that will vary based on the type of plan you choose.
Some additional questions to consider that impact the type of plan you choose include:
- What medications am I taking right now?
- Will I be taking these medications for the rest of my life?
- Do my medications have to be name-brand medications, or is there a generic available?
- Are the medications I need covered by this plan?
- Do I need any specialty medications, like biologics?
Apart from your medication needs, think about your financial health, too. Consider what your monthly budget is and ask yourself questions like:
- How much can you afford to pay for a prescription plan each month?
- How does this compare to the cost of your medications each month?
- If you have to add prescription coverage down the road, how much will you pay in penalties?
- Do you have any chronic conditions that might increase your medication needs later on?
If you have any other coverage outside of Medicare, this should also be a part of your decision-making when it comes to a Part D plan.
The following types of coverage may either supplement or replace your need for a prescription plan:
- employer or union health coverage
- Medicare supplement plans (Medigap)
- Supplemental Security Income benefits
- State Pharmaceutical Assistance Program
- residence in a long-term care facility
- residence in public housing
- eligibility for food stamps
- veteran’s benefits
- military health benefits
- Indian Health Services
2. Start shopping early
These are a lot of questions to consider. Start planning early to find the best plan for your needs at the best price.
There are only certain windows of time when you can join a plan or switch from your current plan to a new one. If you sign up late, it could cost you more.
If you choose not to sign up for a prescription drug plan when you’re first eligible, you might have to pay a late enrollment penalty if you add one later.
This penalty isn’t a one-time fee — it will be added to the cost of your drug plan each month. The fee is calculated using the amount of time you went without drug coverage.
The penalty is calculated by taking 1% of Part D National Base Beneficiary Premium and multiplying that by the number of months since you became eligible for Medicare and didn’t have prescription drug coverage.
Here’s an example of how the cost might break down:
- Let’s say you wait 2 years after you’re first eligible for Medicare to sign up for a prescription drug plan.
- The 2020 Part D National Base Beneficiary Premium used to calculate the late enrollment penalty is $32.74.
- One percent of that is about $0.33.
- You’d multiply that by the 24 months you went without coverage.
- That would mean you’d face a late enrollment penalty of about $7.86 per month.
- This penalty is added to your base premium each year for as long as you have Medicare coverage.
- This would raise your Part D premium from $32.74 per month to about $40.60 per month.
3. Gather helpful information
There’s a lot of information online that can help you find the best Part D plan to fit your needs. Here are some resources to may help guide you through process or questions you may have, including:
- when and how to sign up for a drug plan
- how to switch from one drug plan to another
- when you might qualify for a special enrollment period
- how to qualify for Medicare’s Extra Help program
- what medications are covered by original Medicare
- how formularies work to cover different tiers of Medications
- tools to find and compare Medicare plans
4. Check your eligibility for assistance programs
Even with a prescription drug plan, medication costs can be difficult to manage. If you’re still having trouble with your monthly costs, there are a number of programs that can help:
- Medicare’s Extra Help program. The Extra Help program offers help with premiums, deductibles, coinsurances, and drug costs for people with limited income.
- Medicare savings programs. There are a number of state-based programs that can help you pay for Medicare premiums. If you’re eligible for one of these programs, you’re also eligible for Extra Help.
- Medicaid. If you have Medicaid, Medicare pays for your medications. You’ll still have to enroll in a prescription drug plan and may have to pay a small portion of your costs. Still, there are substantial savings.
- Pharmaceutical assistance programs. These programs are offered by pharmaceutical companies and may offer you discounts on individual medications.
- State Pharmaceutical Assistance Programs. These state programs can offer help paying for your medications.
- Community programs. There are also a number of local community programs, like Programs of All-Inclusive Care for the Elderly (PACE), that may offer assistance with medication costs.
To enroll in a Part D plan for the first time, begin researching your needs and options before you turn 65. You’ll have 3 months before and 3 months after your 65th birthday month to sign up for Medicare plans, including Part D plans.
When to enroll
After your initial enrollment in original Medicare (parts A and B), you have 63 days to choose a Medicare Advantage and/or a prescription drug plan. If you don’t enroll at this time, you’ll have to wait for specific enrollment periods.
Here are some important enrollment dates and deadlines:
- You have 3 months before you turn 65 years old, the month of your 65th birthday, and 3 months after your turn 65 years old to complete your initial Medicare enrollment, including Part D coverage.
- You can sign up, change, or drop prescription drug plans during Medicare’s open enrollment period that lasts from October 15 to December 7.
- If you have a Medicare Advantage plan, you can change coverage during the general enrollment period from January 1 to March 31.
- There’s also a specific Part D enrollment/Medicare add-ons period from April 1 to June 30. If you don’t have Medicare Part A, but you enrolled in Part B during the general enrollment period, you can sign up for a Part D prescription drug plan.
- Other special enrollment periods may apply in certain qualifying situations.
How to enroll
To enroll in a Part D plan, you have several options. You can enroll:
- online through the Medicare plan finder tool
- by calling Medicare directly at 800-MEDICARE (800-633-4227)
- by contacting a private insurance company that offers the Part D plan you want, or visiting the company’s website to submit an application
When you enroll, be prepared to provide some basic information about yourself. You’ll also need to have your Medicare card ready to give your Medicare number and the date that your original Medicare coverage began.
Medicare Part D is a private insurance plan that is backed by the federal government.
Medicare pays about 75 percent of your medication costs with these plans, but you must enroll through a private company. You’ll also have to pay for a share of your medication costs.
These costs usually include a monthly premium, deductibles, and copayments. How much you pay and what’s covered depends on the plan you choose.
While there are no federal programs for prescription coverage, Medicare does set a standard for what private plans must cover. Each prescription drug plan must cover at least two medications in each drug category. Each plan can create their own list of covered drugs, as long as there are two in each medication category. These lists are called formularies.
Within the formulary, there are different levels of medications. These levels— called tiers — are based on your plan’s preference for certain generic, brand name, or specialty medications. The tier your medication falls on will determine the cost you’ll pay.
Plans may also have preferences about how you receive your medications. Find out what types of pharmacies are covered under your plan and whether it’s more cost-effective to use retail or mail-order pharmacies.
If you still have questions
If you need a bit more help figuring out what prescription drug plan is best for you, there are a number of organizations that you can reach out to:
- There are a lot of things to consider when making coverage choices during your initial enrollment in Medicare.
- Consider your current and future needs, as well as your budget when researching prescription drug plans.
- Enrolling late could cost you a life-long penalty.
- There are a number of programs and organizations that can help you choose a plan and afford coverage for your medications.
The information on this website may assist you in making personal decisions about insurance, but it is not intended to provide advice regarding the purchase or use of any insurance or insurance products. Healthline Media does not transact the business of insurance in any manner and is not licensed as an insurance company or producer in any U.S. jurisdiction. Healthline Media does not recommend or endorse any third parties that may transact the business of insurance.