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MEDICARE PRESCRIPTION DRUG PLANS
You must be enrolled in Medicare Part A and/or Part B to be eligible to enroll in Part D. Medicare drug coverage is only available through private plans. If you have Medicare Part A and/or Part B and you do not have other drug coverage (creditable coverage), you should enroll in a Part D plan.
HELPFUL TERMS THAT INVOLVE MEDICARE PART D THAT EVERY MEDICARE BENEFICIARY NEEDS TO BE FAMILIAR WITH
FORMULARY
This is the Prescription Drug List of all of the medications that are covered by a Part D Drug plan. Each insurance company has their own formularies for each of their Medicare Part D Drug plans. Medicare only requires that every plan has at least two drugs for each Drug Classification. Meaning that the Diabetes Medication you take may not be on this plan but there are other plans that will include the medicine that works best for you.
DRUG TIERS
Every prescription medication is assigned a Drug Tier based on the costs of the drug. Every Medicare Part D Drug Plan utilizes the same Drug Tier system, the only thing that can change is what drugs they have included in their formulary.
Tier 1 - Lowest Cost Generic Drugs
Tier 2 - Preferred Generics Drugs
Tier 3 - Preferred Name Brand Drugs & High Cost Generics
Tier 4 - Non-Preferred Brand Name Drugs
Tier 5 - Specialty Drugs
DEDUCTIBLE
Most Medicare Part D Drug plans have a deductible associated with it. Some have deductibles for Tiers 2-5, some 3-5 and some have no deductibles at all. Having a Deductible means you have to reach the Deductible before the plan starts to give you the drugs at their discounted price, until you reach it, you are paying full price for that particular medication. There are no Deductibles in place for Tier 1 medications.
CO-PAY
With a co-payment, you pay a set amount (like $2) for all drugs on a Tier 2. You may pay a lower co-payment for generic drugs than brand-name drugs.
CO-INSURANCE
With coinsurance, you pay a percentage of the cost (like 25%) of the drug.
Note: The amount you pay for a covered prescription is usually for a one-month supply of a drug. However, you can request less than a one-month supply. You might do this if you’re trying a new medication, or you want to synchronize refills for your medications.
If you get less than a one-month supply, the amount you pay is reduced based on the amount you actually get.
YOU ONLY HAVE TWO OPTIONS TO GET PRESCRIPTION DRUG COVERAGE WITH MEDICARE
MEDICARE PART D STAND-ALONE PRESCRIPTION DRUG PLANS
Stand-Alone Medicare Part D Plans are Prescription Drug Plans that you have to choose because they are not included in Medicare Part A or Medicare Part B. These plans (sometimes called "PDPs") add drug coverage to Original Medicare, some Medicare Cost Plans (Most Medicare Advantage PPO Plans do not include Prescription Drug Plans like Medicare Advantage HMO plans do), some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
MEDICARE ADVANTAGE PLANS THAT INCLUDE PRESCRIPTIONS DRUG COVERAGE (MA/PD PLANS)
The Majority of Medicare Advantage Plans include a Prescription Drug Plan in their plans. Like an HMO, PPO or SNP or other Medicare Health Plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.
CONSIDER ALL OF YOUR DRUG CHOICES
Before you make a decision, talk with your agent or broker and learn how prescription drug coverage works with any other drug coverage that you might have. For example, you may have drug coverage from an employer or union, TRICARE, the Department of Veterans Affairs (VA), the Indian Health Service, or a Medicare Supplement Insurance (Medigap) policy. Compare your current coverage to Medicare drug coverage. The drug coverage you already have may change because of Medicare drug coverage, so consider all your coverage options. If you have (or are eligible for) other types of drug coverage, read all the materials you get from your insurer or plan provider. Talk to your benefits administrator, insurer, or plan provider before you make any changes to your current coverage.
BE CAREFUL WHEN LOOKING FOR A NEW MEDICARE PART D PRESCRIPTION DRUG PLAN
Your Medicare Advantage Plan (Part C) will disenroll you and you'll go back to Original Medicare if both of these apply:
Your Medicare Advantage Plan includes prescription drug coverage.
You join a Medicare Prescription Drug Plan (Part D).
ARE THERE PREMIUMS FOR MEDICARE PART D?
Most Medicare Prescription Drug Plans charge a monthly fee that varies by plan. You pay this in addition to the Medicare Part B premium. If you join a Medicare Advantage Plan (Medicare Part C) or Medicare Cost Plan that includes Medicare prescription drug coverage, the plan's monthly premium may include an amount for drug coverage.
Note: The same insurance company may offer Medigap policies and Medicare Prescription Drug Plans.
If you join a Medigap policy and a Medicare drug plan offered by the same company, you may need to make 2 separate premium payments for your coverage. Contact your insurance company for more details.
HOW CAN I PAY FOR MY PART D PREMIUMS?
Contact your drug plan (not Social Security) if you want your premium deducted from your monthly Social Security payment. Your first deduction will usually take 3 months to start, and 3 months of premiums will likely be deducted at once. After that, only one premium will be deducted each month. You may also see a delay in premiums being withheld if you switch plans. If you want to stop premium deductions and get billed directly, contact your drug plan.
HOW MUCH DO MEDICARE PART D DRUG PLANS COST?
Medicare PDP Plans run from $0.00 to well over $150 per month depending on where you live. That is why there are so many choices for people to make. The average price for 2024 is between $27 - $42 per month. However, if you only have a few “Generic” medications your costs should be between $0.00 - $21.00 for you monthly premium.
NOTE: The cost of the Medications is not included in the premiums.
IRMAA & PART D
Most Medicare beneficiaries only need pay their Part D premium. If you don't sign up for Part D when you're first eligible (Within 63 Days of yor Medicare Part B Effective Date), you may have to pay a Medicare Part D late enrollment penalty.
If your modified adjusted gross income is above a certain amount, you may pay a Part D income-related monthly adjustment amount (Part D IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago (the most recent tax return information provided to Social Security by the IRS). You'll pay the Part D IRMAA amount in addition to your monthly plan premium, and this extra amount is paid directly to Medicare, not to your plan. The chart below lists the extra amount costs by income.
Social Security will contact you if you have to pay Part D IRMAA, based on your income. The amount you pay can change each year. If you have to pay a higher amount for your Part D premium and you disagree (for example, if your income goes down). If you have questions about your Medicare prescription drug coverage, contact your plan.
Note: The extra amount you have to pay isn’t part of your plan premium. You don’t pay the extra amount to your plan. Most people have the extra amount taken from their Social Security check. If the amount isn’t taken from your check, you’ll get a bill from Medicare or the Railroad Retirement Board. You must pay this amount to keep your Part D coverage. You’ll also have to pay this extra amount if you’re in a Medicare Advantage Plan that includes drug coverage. If Social Security notifies you about paying a higher amount for your Part D coverage, you’re required by law to pay the Part D-Income Related Monthly Adjustment Amount (Part D IRMAA). If you don’t pay the Part D IRMAA, you’ll lose your Part D coverage.
REMEMBER THAT YOU ARE OBLIGATED TO PAY ANY PART D PENALTY TO MEDICARE, NOT YOUR EMPLOYER.
You’re required to pay the Part D IRMAA, even if your employer or a third party (like a teacher’s union or a retirement system) pays for your Part D plan premiums. If you don’t pay the Part D IRMAA and get disenrolled, you may also lose your retirement coverage and you may not be able to get it back.
IMPORTAN TIP
Pay your Part D IRMAA bill to Medicare as soon as you get it. Keep your address current with Social Security, even if you don’t get a Social Security Check.
MEDICARE PART D LATE ENROLLMENT PENALTY
The late enrollment penalty is an amount added to your Medicare Part D monthly premium. 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
A Medicare Prescription Drug Plan (Part D)
A Medicare Advantage Plan (Part C) (like an HMO or PPO) or another Medicare health plan that offers Medicare prescription drug coverage
Creditable Prescription Drug Coverage.
WHAT IS THE COST ASSOCIATE WITH A MEDICARE PART D PENALTY?
The cost of the late enrollment penalty 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" ($33.43 in 2022) times the number of full, uncovered months you didn't have Part D or creditable coverage. Monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
The national base beneficiary premium may change each year, so your penalty amount may also change each year.
EXAMPLE OF A TRUE PART D PENALTY CASE:
John Baker is currently eligible for Medicare, his Initial Enrollment Period ended on May 31, 2017, He doesn't have prescription drug coverage from any other source. Because John didn't join a Medicare Part D Prescription Drug Plan by May 31, 217, and instead joined during the Open Enrollment Period that ended December 7, 2020. His drug coverage was effective January 1, 2021.
Since John was without creditable prescription drug coverage from June 2017–December 2020, his Part D penalty was calculated by figuring (1% for each of the National Part D Premium Average which was $35.44) So 31 months multiplied by $0.33544 per month = $10.55. Since the monthly penalty is always rounded to the nearest $0.10, Mr. Baker paid $10.60 each month in addition to her plan's monthly premium and his penalty will never go away. Due to his late enrollment into Medicare Part D, John will always pay his monthly premium plus an additional $10.60 per month.
After you join a Medicare drug plan, Medicare will inform you if you owe a penalty and what your premium will be. In general, you'll have to pay this penalty for as long as you have a Medicare drug plan.
DO I HAVE ANY RECOURSE IF I DISAGREE WITH THE LATE ENROLLMENT PENALTY?
You may be able to ask for a "reconsideration." Your drug plan will send information about how to request a reconsideration. Complete the form and return it to the address or fax number listed on the form. You must do this within 60 days from the date on the letter telling you that you owe a late enrollment penalty. Also send any proof that supports your case, like a copy of your notice of creditable prescription drug coverage from an employer or union plan.
WHAT IF YOU DO NOT AGREE TO THE PENALTY? IS THERE ANYTHING ELSE YOU CAN DO ABOUT IT?
By law, the late enrollment penalty is part of the premium, so you must pay the penalty with the premium. You must also pay the penalty even if you've asked for a reconsideration. Medicare drug plans can disenroll members who don't pay their premiums, including the late enrollment penalty portion of the premium.
HOW LONG DOES IT USUALLY TAKE TO RECEIVE A DECISION?
In general, Medicare’s contractor makes reconsideration decisions within 90 days. The contractor will try to decide as quickly as possible. However, you may request an extension. Or, for good cause, Medicare’s contractor may take an additional 14 days to resolve your case.
WHAT HAPPENS IF YOU WIN AND THE PENALTY IS INCORRECT?
If Medicare’s contractor decides that all or part of your late enrollment penalty is wrong, the Medicare contractor will send you and your drug plan a letter explaining its decision. Your Medicare drug plan will remove or reduce your late enrollment penalty. The plan will send you a letter that shows the correct premium amount and explains whether you'll get a refund.
WHAT HAPPENS IF THE PENALTY IS UPHELD?
If Medicare’s contractor decides that your late enrollment penalty is correct, the Medicare contractor will send you a letter explaining the decision, and you must pay the penalty.
WHEN CAN YOU CHANGE YOUR MEDICARE PART D PLAN?
You can switch to a new Medicare drug plan by joining another drug plan whenever you are eligible. The Annual Enrollment Period (AEP) runs every Fall from October 15th - December 7th. This is the time you can change your Prescription Drug Coverage for the upcoming year. There may be other times that you could qualify for a SEP (Special Election Period) if you move out of the plans network. You should contact your agent or call 1-800-Medicare if you have any questions.
Note: You don't need to cancel your old Medicare drug plan. Your current Medicare drug plan coverage will end when your new drug plan begins. If you want to join a plan or switch plans, do so as soon as possible so that you’ll have your membership card when your coverage begins, and you can get your prescriptions filled without delay.
WHAT IF YOU ARE NOT TAKING ANY PRESCRIPTION MEDICATIONS CURRENTLY?
You do not have to enroll in Part D ever. But it is a safe bet that it will save you money in the long run, even if you do not currently have any prescribed medications. If this is you, I would enroll in the lowest priced plan available just so you will never have to incur the penalty on down the road. I know that sounds silly, but it is the government we are talking about. I agree, it is silly, but it is not changing, and we all just need to accept a couple of the flaws the best we can.
