Call (888) 310-0376 to Compare all Medicare Part D Plans in Your State. Get Instant Access I explain 5 things you should know about Medicare Part D before you enroll. There have been significant changes to the Part D program since its inception in 2006.
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There have been changes to enrollment periods, how premiums are calculated as well as adjustments to the Standard Benefit Model. Some things haven't changed such as who is eligible to join and how plans work.
Here are 5 things you should know about the Medicare Part D program and Part D plans in particular.
One. You need to know what Part D is and how it works. So what is Medicare Part D?
Part D is optional prescription drug coverage for Medicare beneficiaries who are enrolled in both Medicare Parts A and B. Although Part D is optional, you should enroll when you first become eligible or potentially be subject to the Part D penalty which will have an impact on what you pay for as long as you are enrolled in a plan.
Part D is offered by private insurance companies and is not part of original Medicare. Plans are offered by service area and you must live in a service area to be eligible for a plan.
You can get Part D in one of two ways; you can enroll in a stand-alone plan (PDP) or you can enroll in a Medicare Advantage Plan that includes drug coverage. Plans are effective for one calendar year.
Two. Understanding the terminology of Part D is important.
Medicare Part D Premiums — Premiums are paid monthly and have ranged in the low to mid $30 range for the past few years.
Part D Deductible — The deductible is the amount you may be required to pay prior to your plan paying a share of prescription drugs.
Part D copayment / Coinsurance — This is the amount you pay at the pharmacy. Drugs are place in tiers and normally a plan has four or five tiers.
Initial Coverage Limit — This amount is set annually by Medicare and will be the same for all plans. It is the amount both you and your plan will pay prior to you reaching the Part D coverage gap.
Medicare Part D Donut Hole — This is the coverage gap that you may enter if you exceed the initial coverage limit.
Part D Catastrophic Coverage — This phase is reached after you have spent a fixed amount in the Donut Hole, currently $4750. During this phase you will pay very small copayments or coinsurance amounts for your drugs.
Third. You should understand the Medicare Part D enrollment periods. There are 3 types of Part D enrollment periods.
When you first become eligible you have a seven month window to submit an application. If starts three months before the month you turn 65 or if you will receive Part D due to a disability it will start 3 months prior to your 25th month of disability.
The Part D Annual Election Period is the time to compare Part D Plans because you are able to switch, drop or enroll in a plan.
Part D Special Enrollment Periods are time that you can enroll in a plan, normally due to a change in your individual circumstances. Such as, moving from a plan's service area or losing other creditable drug coverage like from an employer or union (including (COBRA). If you live in a nursing home you also are entitled to a Special Enrollment Period.
The 5 Star Special Enrollment Period allows you the opportunity to switch into or enroll in a 5 Star-rated plan once per year. Plans are rated from one to five stars by Medicare and are a reflection of the experience people who have been in enrolled in the plan have had. You are allowed to enroll between December 30th and November 8th.
If you qualify for Medicare extra help you can change plans anytime.
Fourth. You must know how to conduct a thorough comparison of Medicare Part D plans.
You can see all available plans for your service area at the Medicare Plan Finder at medicare.gov. But don't choose a plan based on premium alone. There's a lot more to plan cost than the monthly premium.
Start your search for the best plan by exploring the Medicare Part D formulary for each plan.
The formulary is the list of drugs which are covered by a plan. There is no universal Part D formulary, each plan will be unique. Formularies are either Basic or Enhanced. Making sure all your drugs are covered is your number one goal.
Copayments and Coinsurance amounts
Part D Mail Order benefits
Fifth. You should be aware that your Part D premium may not be what is published at medicare.gov. Premiums are now tied to your annual income. If you qualify for Medicare extra help, you may pay $0 premiums, but if you earn over $85,000 as an individual or over $170,000 filing jointly, you are going to pay more.