Medicare Part D - Prescription Drugs
What is Medicare Part D?
Medicare Part D is prescription drug coverage, which can be combined with other Medicare health insurance. Part D plans are offered by private health insurance companies which are approved by the federal government.
It is optional to add a Part D plan to Original Medicare Part A and B, Medicare Supplement Insurance (Medigap) plans, or Part C - Medicare Advantage plans (however many Medicare Advantage plans already include Part D coverage).
Although Part D is optional, you may face a penalty for signing up after your initial enrollment period. Please see the section below, “Is there a penalty for signing up late for Part D?”, for more information.
Who is eligible for Part D?
Part D must be combined with other Medicare coverage. Therefore, the same eligibility requirements for Part A and B apply to Part D.
In general, people 65 or older are eligible for Part D.
If you are 65 or older, you are eligible for Part D if:
- You currently receive retirement benefits from Social Security or the Railroad Retirement Board.
- You are currently eligible for Social Security or the Railroad Retirement Board benefits but you haven’t applied for them yet.
If you are under 65, you are eligible for Part D if:
- You have received Social Security or the Railroad Retirement Board disability benefits for 24 months
- You have End-Stage Renal Disease (ESRD) and meet certain criteria
What does Part D cover?
Part D covers prescription drugs. Each Part D plan has a list of prescription drugs which are covered. This list is known as a formulary.
Part D plans have the following coverage rules:
- Prior authorization: You and/or your prescriber must contact the prescription drug plan before you can fill certain prescriptions. Your prescriber may need to show that the prescription drug is medically necessary for the plan to cover it.
- Quantity limits: Limits on how much medication you can get at a time.
- Step therapy: You must try one or more similar, lower cost prescription drugs before the plan will cover the prescribed prescription drug.
Is there a monthly premium cost for Part D plans?
Yes, Part D plans typically have a monthly premium which is determined by the private health insurance company offering the plan.
What are the out-of-pocket costs (deductible, coinsurance) for Part D?
Part D out-of-pocket costs vary by plan, depending on:
- The prescription drugs you use
- Whether you go to a pharmacy in your plan's network
- Whether the prescription drugs you use are on your plan's formulary
- Whether you get Extra Help paying your Medicare Part D costs
Deductible - the amount you must pay each year for your prescriptions before your Medicare prescription drug plan begins to pay its share of your covered prescription drugs. Deductibles vary between Medicare prescription drug plans. Some Medicare prescription drug plans don't have a deductible.
Copay/Coinsurance - the amount you pay for each of your prescriptions after you have paid the deductible (if your plan has one) is either a copayment or coinsurance. Some Medicare Prescription Drug Plans have different levels or " tiers " of copayments or coinsurance, with different costs for different types of prescription drugs.
With a copayment, you pay a set amount (like, $10) for all prescription drugs on a tier. For example, you may pay a lower copayment for generic prescription drugs than brand-name prescription drugs. Coinsurance means you pay a percentage of the cost (like, 25%) of the prescription drug.
When can I enroll in Part D?
There is a 7 month initial enrollment period for Part D. You can enroll starting 3 months before the month you turn 65, during the month you turn 65, and 3 months after your birthday month.
If you are not satisfied with you Part D plan, you are allowed to change plans during the Annual Election Period (AEP), October 15th to December 7th.
Is there a penalty for signing up late for Part D?
Yes, although Part D is optional, you may face a penalty for signing up after your initial enrollment period.
The cost of the late enrollment penalty is added to the monthly premium cost of your Part D plan, and depends on how long you went without Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($33.19 in 2019) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium. The national base beneficiary premium may increase each year, so your penalty amount may also increase each year.