When Can I Join a Medicare Part D Drug Plan?
If you are eligible for Medicare benefits because you are 65 or have a disability, you can enroll in a Medicare Part D drug plan. You can enroll the month you turn 65, or in the three months before or three months after you turn 65 (this is the same as the initial enrollment period for Medicare A and B). If you do not enroll during that seven-month period, you may have to pay a late enrollment penalty in the form of a higher premium.
If you have Medicare, you can enroll in a Part D drug plan during the open enrollment period, which begins on October 15 and lasts until December 7 each year, with plan selections effective on January 1. If you have a Part D drug plan already, you can change to a different plan during this enrollment period.
You can enroll in the Part D drug plan at any time without paying a penalty if you have both Medicaid and Medicare, or if your income makes you eligible for extra help ($19,140 for an individual in 2020, or $25,860 for a couple, in addition to asset/resource limits).
Should I Enroll in a Medicare Part D Drug Plan?
There are many plans available in each state, which can make it difficult to know which plan to choose and whether you will save money on your prescription medications by enrolling in a Part D plan.
Premiums for Part D plans range from low cost (under $20 per month) to more than $100 each month, with most plans falling within the $30 to $60 per month range (the average for 2019 is about $47/month).
The following examples show how Medicare Part D may or may not help you immediately on your prescription medications. But skipping prescription coverage altogether is not a wise idea, even if you don’t currently take any medications at all—we’ll get into that in a moment.
Example 1: Ms. Smith has type 2 diabetes, high blood pressure, and depression. She takes three generic medications, namely metformin for her diabetes, enalapril for her high blood pressure, and paroxetine for her depression. She buys these drugs at her local Costco at a cost of $10 for a 90-day supply of each medication. Her annual cost is $120. The least expensive Medicare drug plan in her area has a monthly premium of $15 per month for an annual cost of $180. A Part D plan may not seem to make sense in the short-term for Ms. Smith, but that might be a short-sighted conclusion, due to the penalty for people who enroll late.
Note: Mrs. Smith should probably purchase at least the lowest-cost plan available to her, despite the fact that doing so might not provide an immediate benefit. Since she has three chronic health conditions that could worsen with age, there is a risk that she may need to take more expensive medications in the future. If she skips Part D initially (and does not have creditable drug coverage from another source) and then signs up later, she’ll have to pay a Part D Late Enrollment Penalty.
And she’ll be limited to signing up during the fall enrollment period, with coverage effective in January. That means she could find herself in a situation where she needs a high-cost medication and has to wait up to a year to have coverage for it.
The short story? Don’t skip prescription coverage. This advice—to enroll in a Part D plan as soon as you enroll in Medicare unless you have other creditable coverage for prescriptions—applies even to Medicare beneficiaries who are perfectly healthy, since few people remain in perfect health throughout their entire life.
Example 2: Mr. Smith has type 2 diabetes, and takes simvastatin for his high cholesterol, Diovan for his high blood pressure, and AndroGel for his low testosterone. He’s not yet eligible for Medicare and is currently uninsured, paying cash for his medications at a pharmacy in his local supermarket. Diovan and Androgel are both expensive medications and have no generic version. Mr. Smith’s medications cost him more than $2,500 each year. After paying his monthly premium, deductible, and drug copays, he can save more than $500 each year by joining a Part D drug plan once he’s eligible for Medicare.
Example 3: Mr. Jones takes several expensive prescription drugs, but he also has coverage through his employer that coordinates with Medicare and covers his medications. The coverage his employer offers is at least as good as Part D coverage, so it’s considered creditable. That means he can keep his employer-sponsored coverage, forego Part D coverage, and still be able to enroll in Part D later on (if and when his employer-sponsored drug coverage ends) without a penalty.
By and large, it’s unwise to go without any drug coverage at all once you’re on Medicare. If you do need drug coverage later on, you’ll pay more for it due to the late penalty (which will apply for the rest of your life). And enrollment in most cases is limited to the October 15-December 7 window, with coverage effective January 1. So if you were to be diagnosed with a chronic condition requiring expensive medications in a future year in February, for example, you’d be stuck paying full price for your medication for the rest of the year, and then stuck with the late enrollment penalty after that.
How Do I Choose a Part D Drug Plan?
You can get Medicare Part D coverage from a stand-alone drug plan (if you have Original Medicare) or a Medicare Advantage plan with built-in Part D coverage.
There are approximately 20-30 different Part D drug plans offered by a number of different health insurance companies in each state (for 2019, the number of available stand-alone Part D plans per state ranges from 24 in Alaska, to 31 in Pennsylvania and West Virginia, in addition to an average of 20 Medicare Advantage plans that include Part D coverage). All Part D drug plans must offer a standard set of drug benefits as required by Medicare. Moreover, drug plans may include additional medications on their formularies.
The cost to join a plan depends on whether the plan offers benefits beyond those mandated by Medicare (ie, “enhanced benefits”). The following may cause the monthly premium to be more expensive:
The plan covers additional medications on its formulary The plan does not have a deductible at the beginning of the year (deductibles for Part D plans can be as high as $435 for 2020)
The ten most popular stand-alone Part D plans for 2020 have premiums that vary from $17/month to $76/month. Some of those plans are enhanced and some are basic—in general, the enhanced plans have higher premiums, while the basic plans have lower premiums.
One of the most helpful online resources is the government’s Medicare plan finder tool, which allows you to compare PDPs, learn about plans offered in your state, and view each plan’s drug formulary. You can compare plans side-by-side and display only those plans that cover your medications.
Additionally, the site has suggestions for lowering costs in the coverage gap. If you are comfortable using the Internet, you can select and enroll in a plan online. You can get the same information by calling the Medicare helpline at 1-800-Medicare.
Where Else Can I Get Help When Choosing a Part D Drug Plan?
Before joining a Part D drug plan, it is important you understand and are comfortable with your choice. Many communities have senior centers with staff that can help guide you through the selection process.
If you look for information online, try to avoid sites that are sponsored by insurance companies that provide prescription drug plans. Instead, take a look at the websites of these organizations:
Medicare Rights Center
The Medicare Rights Center, an independent, non-profit group, is the largest organization in the United States (aside from the federal government) that provides information and assistance for people with Medicare. Its site has a section about Medicare Part D drug coverage, including information about programs that could help you pay for your prescription drug costs. A unique feature of the site is the Medicare Interactive Counselor, a tool that walks you through the process of finding the drug plan that makes sense for you.
SHIP
The State Health Insurance Assistance Program provides one-on-one counseling and assistance to Medicare patients and their families. Select your state to find a local organization that will help you.
