Ron Elledge is a seasoned Medicare consultant and author of “Medicare Made Easy.” As a Medicare expert, he regularly consults beneficiaries on Medicare rules, regulations, and strategies.
Part D prescription coverage helps Medicare beneficiaries pay for a portion of the cost of self-administered prescription drugs. It’s an optional government program, but if you wait to enroll after your Initial Enrollment Period (IEP), and have no Special Enrollment Period (SEP), you will incur a Part D late enrollment penalty.
Part D plans are sold by private insurance companies that contract with Medicare and cover Medicare-approved medications prescribed by Medicare-contracted doctors. Their cost structure includes premiums, copayments, and coinsurance. They can be purchased as a stand-alone Part D Prescription Drug Plan (PDP) or included in a Medicare Advantage – Prescription Drug Plan (MA-PD).
Enrollment criteria and timing:
1. You may only enroll in or switch plans at certain times of the year.
A. You can enroll in any Part D plan during your Initial Enrollment Period (IEP), the seven-month period beginning three months before turning 65 and ending three months after turning 65.
You can enroll during the Annual Enrollment Period (AEP), which runs from October 15 through December 7 of each year. You may newly enroll in a Part D plan, disenroll, or make a one-time switch from one plan to another.
B. You may also make changes during the Medicare Advantage Open Enrollment period (MA-OEP). You cannot newly enroll into a Medicare Advantage plan with or without Drug coverage and you cannot change from one stand-alone PDP to another. However, you can change a Medicare Advantage plan with Drug Coverage (MA-PD) for another of like-kind plan or disenroll from your MA-PD, return to original Medicare, and then purchase a stand-alone PDP.
2. You must be a U.S. citizen or lawfully present in the country for a minimum of five years and you must be a permanent resident.
3. You must live in the service area of the plan you choose to enroll in.
4. Medicare Prescription Drug Plans do not cover vaccines, medical supplies, or any drug that is covered under Part B.
Eligibility for prescription drugs differs depending the type of Part D plan you purchase.
Stand-Alone (PDP) Plan Enrollment
Stand-alone PDP plans are available from private insurance companies and can be used with your Medicare supplement plan, some Medicare Advantage plans, and many groups plans that do not cover prescription drugs. If you have a group plan, be sure to check with your human resources administrator to affirm that a PDP will not force you off their group coverage.
It is essential that you enroll in a Medicare PDP within 63 days of leaving a group plan and losing your creditable company prescription drug coverage. If you leave or lose your group coverage and fail to sign up for Medicare drug coverage in a timely manner, your penalty is not calculated from when you retired but from when you turned 65.
For example, if you work until 70 and exceed the 63-day window to sign up without penalty, you’ll face a 68% penalty.
Medicare Advantage Plan with Prescription Drug Plan (MA-PD) Enrollment
MA-PD plans include coverage for Part A hospital, Part B doctor and Part D prescription drugs, as well as extra benefits that Original Medicare does not offer. All the rules for enrolling MA-PD plans are the same as those for a stand-alone Medicare Part D plan with the following exceptions:
1. Medicare Advantage plans with drug coverage (MA-PD) require that the enrollee have both Parts A and B of Medicare active for the entire time covered.
2. You can make a one time, like-for-like, switch or disenroll during the MA-OEP.
3. If you have delayed your Part B, your MA-PD plan must coincide with your Part B start date.
Part D Late Enrollment Penalty
Even if you do not take prescription drugs, you should consider enrolling in a Medicare prescription drug plan when first eligible, whether it’s a PDP or MA-PD. Medicare does not require you to enroll in a Medicare Prescription Drug plan. However, if you fail to enroll when you are first eligible and have no creditable drug coverage, you will be assessed a penalty of 1% for each month you wait to enroll.
If you are past your Initial Enrollment Period (IEP) and have no other Special Enrollment Period (SEP), you can only enroll during the Annual Enrollment Period (AEP) between October 15 and December 7 each year. If you fail to sign up for Part D in a timely manner, you’ll become subject to the Part D late enrollment penalty.
This penalty amount is added to your Medicare Part D monthly premium. It is based on the number of months you have gone without Part D or other creditable drug coverage after becoming eligible and continues for as long as you maintain Part D coverage.
You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:
1. A Medicare Prescription Drug plan (Part D).
2. A Medicare Advantage plan with drug coverage (MA-PD), like an HMO or PPO.
3. Another Medicare Health plan that offers Medicare prescription drug coverage (such as Tricare for Life or VA).
4. Creditable prescription drug coverage from your current employer, union, or overseas volunteer group plan.
The importance of timely enrollment in all areas of Medicare cannot be overstated. Not only can it cost you late penalties, but late enrollment can also cause a delay in coverage.
Eligibility, plan type, and timing are all crucial elements of successful Medicare Prescription Drug Coverage enrollment.