Shop around for the best Part D plan. Gather information to complete the Part D application. Sign up for Part D at the right time.
Timing is everything when you want to avoid late penalties, especially since you could end up paying them for the rest of your life. Do not miss your enrollment period.
How to Enroll in Part D
Finding the right Part D plan can be difficult, but signing up for a Part D is not. After you enroll in Medicare, you can apply for a Part D plan in one of two ways.
Through the Government
You can enroll for a Part D plan through the Medicare.gov web site. The Find a Plan page allows you to compare available Part D plans based on the medications you take and the pharmacies you prefer to use.
Through a Private Insurance Company
Different insurance companies and even some pharmacies offer online resources to compare Part D plans. Keep in mind these tools may be tailored to their own plans. You can apply online through the plan’s website, by contacting the insurance company by phone, or by visiting a local insurance agency.
Remember you will need your Medicare identification number and the starting dates of your Medicare coverage to complete your applications.
Enrollment Periods
There are several enrollment periods to be aware of when it comes to signing up for Part D. Some enrollment periods happen every year and others happen only under specific circumstances.
Depending on the enrollment period, you could be at risk to pay late penalties. Other enrollment periods are there to help you make changes to your plan. They are optional and will not cost you more if you choose not to use them.
Initial Enrollment Period
Your Initial Enrollment Period begins three months before and ends three months after your 65th birthday. If you miss this enrollment period, you will face late penalties as long as you have a Part D plan.
If you become eligible for Medicare based on a disability, regardless of your age, your Part D enrollment window begins three months from the time you become eligible for Medicare. This begins 24 months after you receive Social Security Disability Insurance benefits or sooner if you become eligible based on end-stage renal disease, Lou Gehrig disease, or Railroad Retirement Board benefits. Miss this enrollment period and you could face late penalties.
If you are younger than 65 years old when you first sign up for Part D, you may be able to get rid of your late penalties. This is because a new enrollment period begins on your 65th birthday. As long as you sign up on schedule this time around, you get a clean slate and your late penalties will be dropped. What you paid in late penalties before that, however, will not be refunded.
Open Enrollment Period
You can change your Medicare plans during the Open Enrollment Period that happens every year between October 15 and December 7. During the Open Enrollment Period, you can make any of the following changes to your prescription drug coverage:
Change from one to another Medicare Advantage plan with or without drug coverage Change from a Medicare Advantage plan with or without drug coverage to Original Medicare with or without a Part D plan Change from Original Medicare with or without a Part D plan to a Medicare Advantage plan with or without drug coverage Change from one to another Part D plan Discontinue your Part D plan Sign up for a Part D plan
This is an optional enrollment period and will not result in any late penalties if you are changing from one prescription drug plan to another. If you are signing up for Part D for the first time, however, pay close attention. You may be charged late penalties if you missed your Initial Enrollment Period or if you were otherwise without creditable drug coverage for more than 63 days.
Changing your Part D coverage during the Open Enrollment Period will not erase any late penalties that were assigned to you earlier.
Medicare Advantage Open Enrollment Period
If you are on a Medicare Advantage plan, you have an additional opportunity to make changes. This enrollment period, started in 2019, is available to you annually from January 1 through March 31. You can:
Change your Medicare Advantage plan to Original MedicareAdd a Part D plan if you changed to Original Medicare during this enrollment periodAdd a Part D plan to a stand-alone Medicare Advantage plan (a Medicare Advantage plan that does not have a Part D prescription plan included)Change from one Medicare Advantage plan to another Medicare Plan
Special Enrollment Periods
There are special circumstances that Medicare takes into consideration when it comes to enrolling in Part D. Depending on the situation, you will be given a different window of time to sign up. These Special Enrollment Periods are outlined below.
You sign up for Medicare during General Enrollment.
If you missed Medicare’s Initial Enrollment Period, you can sign up for Parts A and/or B during the General Enrollment Period from January 1 to March 31. If you enroll in Part B coverage during this time, you will be given the option to sign up for Part D coverage from April 1 to June 30. Your Part D coverage will not begin until July 1.
You receive health insurance from your employer.
If your employer hires more than 20 full-time employee and you receive creditable prescription drug coverage from your employer’s health plan, you can defer your Initial Enrollment Period. Instead, you can sign up for Part D within eight months of leaving your job or your employer-sponsored health plan, whichever comes first. Miss this deadline and you will face late penalties.
Before You Enroll
There are many factors you will need to take into consideration before actually enrolling in Medicare Part D. Not every plan will offer everything you want, but hopefully you can find everything you need. Consider the following factors.
Formulary Coverage
Part D plans offer a large number of medications, including coverage of at least two drugs in each of 146 drug categories. Some plans may go above and beyond, offering even more coverage, usually for an added cost.
The question becomes whether or not the medications on any given formulary match the ones you currently take. A formulary will do no good if you have to change your medications to get them covered. More importantly, you do not want to have to pay out of pocket to keep using the medications you already know work well for you. If you have questions about formulary coverage, do not hesitate to reach out to your Part D plan or your pharmacist for help.
Expenses
Health care can get expensive and quickly. It is in your best interest to take a close look at your budget to see how much you can afford. This will help you to see how much is practical to spend on your Part D plan.
Add up your healthcare expenses over the course of the past year. Use this number as a reference point for the coming year. With that dollar amount as a guide, what Part D plan can you afford that will meet your needs? This strategy will help you to keep costs in check.
Note that Part D plans have a lot in common. In some cases, they may even share the same formulary. However, one thing they may not necessarily share is their cost. These plans can charge you no more than 25 percent of the costs of the prescription drugs they cover, or the actuarial equivalent. They also cannot charge you more than a certain amount for deductibles. Beyond that, private insurance companies charge you whatever they want.
Note that:
Deductibles could be lower but premiums higher. Some plans may charge a low or even no deductible. To make up for it, they may charge higher monthly premiums. This could be to your advantage if you need your drug coverage to kick in sooner. Deductibles could be higher but premiums lower. Some plans may charge the maximum deductible while offering lower premiums. This strategy may keep costs down if you do not spend a lot on medications every year. Lower copays and coinsurances. Other plans may charge less than the recommended 25 percent cost of your drugs. This could be an advantage to you if you take many medications but the benefit may be offset by higher deductibles and premiums.
The Donut Hole
If you take a lot of medications or even a few expensive ones, you may be one of the unlucky people who find themselves in the donut hole. This happens after you and your Part D plan spend a certain amount of money on prescription drugs.
Before you enter the donut hole, you pay up to 25 percent for your medications, never more. During the donut hole, however, those costs dramatically increase, although the amounts have been decreasing annually. In 2018, your out of pocket expenses jumped to 44 percent for generic and 35 percent for brand name medications. In 2019, you will pay 37 percent and 25 percent respectively. In 2020, you will pay 25 percent for both generic and brand name medications, never less.
Some Part D plans may offer higher premiums and deductibles in exchange for keeping donut hole costs down or even eliminating the donut hole altogether. This is an option a private insurance company can offer, not one that Medicare regulates or supervises. Depending on your medication needs and budget, it may be worth it to pay a little extra money up front to save in the donut hole.
Pharmacy Networks Covered
Each Part D plan negotiates with a network of pharmacies to give you access to your medications. Options will include small local pharmacies and large retail chains in addition to mail order pharmacies. Picking preferred pharmacies within your Part D plan’s network will save you even more money since they have negotiated with your plan to charge lower copays.
You need to decide what matters most to you when you pick a Part D plan. When you pick a plan, you are not only picking drug coverage. You are picking a pharmacy network. Unless there is an emergency, you cannot go outside of your plan’s network for your medications. Consider these questions when you shop around for a Part D plan.
Do you have a relationship with a pharmacist at a specific location?Do you prefer the convenience of mail order pharmacies?Do you want to stay with a local pharmacy to support the local economy?Is it more important to use a pharmacy that charges you less?
Changing or Canceling Your Plan
Life is full of twists and turns. You could be faced with new health challenges. Your financial situation could change if you retire or lose your job. Your insurance company could make changes to your plan. All of these things could affect how much prescription drug coverage you need and how much you can afford.
You may need to consider changing your Part D plan. The good new is you are not stuck with the same Part D plan forever. You have choices. The trick is to know when to make those changes.
When You Can Change or Cancel Your Plan
Not paying those premiums could result not only in loss of your prescription drug coverage but could also affect your credit history. But, Medicare recognizes that needs change.
The government allows you to change your plan once a year during the Open Enrollment Period and if you have a Medicare Advantage plan, and also during the Medicare Advantage Open Enrollment Period. They also allow you to make changes under special circumstances, when the Open Enrollment Period may be too far away.
Understanding when you can make these changes could save you money and get you Part D coverage that better meets your needs.
Open Enrollment Period
You can change your prescription drug coverage during the Open Enrollment Period every year from October 15 to December 7. During this time, you can swap Part D plans, change between Medicare Advantage plans with drug coverage, or switch from a Part D plan to a Medicare Advantage plan with drug coverage and vice versa. Since each of these options allows you to continue Medicare benefits uninterrupted, no late penalties will result with any of these changes.
You can also cancel your Part D plan during Open Enrollment. Be careful if you choose to cancel your plan if you do not have an option for creditable coverage. If you choose to return to sign up for Part D coverage in the future, you will be charged late penalties for every month after 63 days you were without creditable coverage.
Medicare Advantage Open Enrollment Period
If you do not like your Medicare Advantage plan, you can opt out and change to Original Medicare or pick a different Medicare Advantage plan during the Medicare Advantage Open Enrollment Period. This happens every year from January 1 to March 31.
You can change from a Medicare Advantage plan with or without drug coverage to Original Medicare with or without a Part D plan. You can also add a Part D plan to a stand-alone Medicare Advantage plan. What you cannot do during this time is change from Original Medicare to a Medicare Advantage plan or change from one Part D plan to another.
Special Enrollment Periods
Open Enrollment may not fall in line with what is happening in your life. Medicare allows for a number of Special Enrollment Periods if life circumstances leave you without prescription drug coverage when you need it. These Special Enrollment Periods do not cover every possible scenario but do give you more options to get Part D coverage during the year. Medicare offers Special Enrollment Periods for the following situations.
You have financial hardships.
If you are eligible for the Extra Help program, you can sign up or change your Medicare Advantage or Part D plan at any time. If you lose eligibility in the Extra Help program, you will be given a one-time special enrollment period from January 1 to March 31.
If you are eligible for Medicaid, you can sign up or change your plan at any time. If you lose Medicare eligibility, you have a three-month special enrollment period.
If you are eligible for the Program of All-Inclusive Care for the Elderly (PACE), you can cancel your Medicare Advantage or Part D plan at any time. You will not need a Part D plan because PACE offers creditable coverage. If you lose PACE eligibility, you have three months to sign up for prescription drug coverage.
If you participate in a State Pharmaceutical Assistance Program (SPAP), you can disenroll from PACE and join a Medicare Advantage plan or Part D plan for two months after your disenrollment from PACE. If you lose SPAP eligibility, you will be given a three-month special enrollment period.
You move to another address.
You will be granted a two-month enrollment period to enroll for or change a Part D plan in the following situations:
You move back to the U. S. after living in a foreign country. You move from one U. S. address to another and this changes the local service area of your Part D plan. You move out of a skilled nursing facility or nursing home. You are released from jail or prison.
The one exception is when you currently live in a skilled nursing facility or a nursing home. In this case, you can sign up and make changes whenever you want.
Your Part D plan changes.
If Medicare and the insurance company do not renew their contract, you can change your Medicare Advantage or Part D plan from October 15 to February 28/29 (the last day in February).
If your plan changes and no longer offers creditable coverage, you have three months from the time you lose coverage or are otherwise notified that you will be losing coverage to find another plan.
If your insurer cancels your Medicare Advantage or Part D plan, you have one month before and one month after the plan ends to find other coverage.
You want a Five-Star plan.
If you want to sign up for a Five-Star plan, whether it is a Medicare Advantage plan with drug coverage or a Part D plan, you can do so any time from December 8 the year the plan earned its Five-Star rating through November 30. Plans will be reviewed for Five-Star status every year.
Common Mistakes and Problems
With so many Part D options available, it can be hard to know which plan to choose. The good news is that even if you pick a plan that is not quite right for you, you can always change it. The bad news is that you cannot change it whenever you want—only under the circumstances outlined above.
You do not want to be stuck with a plan that does not offer the services you need. Avoid these common pitfalls and you will be more likely to find the right plan for you.
Choosing the Same Plan as a Family Member or Friend
Standing by your family and friends is a virtue. That does not mean you should always follow their advice.
Loved ones may have had a good experience with a certain Part D plan and make a recommendation to you. This word of mouth is helpful for many reasons:
It tells you how easy a plan is to use. It tells you the coverage is good. It tells you customer service is friendly.
However, your health issues may not be the same as your family members. Choosing the same Part D plan might not make the most sense if your medical needs are different. Not only that, you may have different budgets to consider. Feel free to consider their advice but also take the time to investigate other plans that could work well for you.
Failing to Read the Annual Notice of Change for Your Current Plan
Your Part D formulary is not set in stone. Medications covered on your formulary change all the time. There will be times when new medications are added and times when medications you take are removed from the formulary.
This could result in you having to change medications or paying more to keep the same medication. Your Part D plan will notify you of changes to the formulary as they affect you. Generally speaking, you will have 60 days to decide whether to change your medication to one on the formulary or appeal to the insurance company to keep covering the medication. If your plan denies coverage and you need that medication, you may want to consider another Part D plan during the next Open Enrollment period.
At the end of the year, your plan will mail you an Annual Notice of Change. This document will outline changes to the formulary as well as changes to the plan that may include adjustments to deductibles, copays, coinsurance and premiums. It is important to take a close look at this information to see if you will get comparable coverage at an agreeable cost the following year. This is a good time to shop around to see if other plans have more to offer.
Not Shopping Around for Plans
Part D plans may be regulated by the federal government but they are run by private insurance companies. These companies are for-profit and can charge you whatever they want with the following exceptions. The government limits how much they can charge you in deductibles each year. Also, you cannot be charged more than 25 percent of the cost of your drugs, or the actuarial equivalent. Beyond that, premiums, copays and coinsurance are in their hands.
The government’s quality standards for Part D plans assure you have access to a wide range of medications. However, each insurance company can charge a different amount for the same drugs based on negotiations they have made with pharmaceutical companies.
It is in your best interest to shop around for Part D plans. Whether you choose one that offers the lowest cost on your medications, costs you less in premiums or provides donut hole coverage, there is sure to be a plan out there for you. You just have to seek it out every year.
Not Signing Up Because You Do Not Take Medications
Not everyone on Medicare takes medication. Even if they do, they may only take one or two inexpensive drugs that could cost less out of pocket than a monthly premium. It is no wonder people ask: “If I do not take medications, why should I pay for prescription drug coverage?”
For one, you never know what the future holds. Accidents and injuries could lead to unexpected health problems. You could have a disease that has not yet been diagnosed. Keep in mind that more than half of all Americans, regardless of age, have at least two or more chronic medical conditions. You could need prescription drug coverage in the future but you may not be able to predict when. It might be better to be safe and have prescription drug coverage than sorry and be without it.
Second, if you do not sign up when you are eligible for Part D, you may be subjected to late penalties later on. Paying more now could save you considerable money in the long run.
Signing Up Too Late
It is important to understand when you are eligible to sign up for Part D. Missing the enrollment period could result in your paying late penalties as long as you have Medicare.
If you miss any of outlined enrollment periods outlined above you could face a penalty that lasts as long as you have Medicare. The exception to this rule is if your Part D penalty was issued before you turned 65 years old. In that case, you get a clean slate on your 65th birthday and your penalties will be stopped.
The longer you go without Part D, the more you will pay in the long run. Please note that changing Part D plans every year does not change the fact that you still have to face late penalties.
Staying With the Same Plan Every Year
We live in a world of convenience but health care is not one of the times to cut corners. Your Part D plan will approach you for renewal every year. Take a close look at your situation. Has anything changed in the past year? Do you take more medications now or anticipate taking more medications in the year to come? Will your plan cost you more the next year? Is it worth the added cost?
Just because your Part D plan worked well for you one year does not mean it will be the best plan for you the next. Do some research and make sure you pick the Part D plan that will give you the best coverage for your dollar.
Where to Get Help
You are not alone when it comes to finding prescription drug coverage that works for you. Seek help if you have questions before you change your Part D plan.
Doctors and Healthcare Providers
You can reach out to your healthcare providers for advice about your medications. They not only know details about your medications, they can also review your medical conditions and discuss whether or not you may need more more medications in the future.
Medicare Advisors and Consultants
Some pharmacies offer free access to Medicare advisors who can review your benefit options. Other resources may offer Medicare counseling for a fee.
Pharmacists
Your local pharmacist deals with Part D plans on a daily basis. They are a valuable resource to discuss different Part D plan options and which ones may better cover the medications you currently take.
State Programs
Every state has a volunteer program that offers free advice to people on Medicare and Medicaid.
Medicare.gov, the official U.S. government site for Medicare, offers a tool to locate places that you can get help and advice when choosing a Medicare plan.
Within three months before or after your 65th birthdayWithin three months after you become eligible for Medicare because of disabilityDuring the annual open enrollment period (October 15 to December 7)Following circumstances such as a move that qualifies you for a special enrollmentFrom April to June if you enroll in Part B during general enrollment period
If you try to enroll outside of these periods, you may be charged a penalty fee unless you qualify for Extra Help.
