Part D
What is Part D?
Medicare Part D is a federal program administered through private insurance companies. These companies offer retail prescription drug coverage to Medicare beneficiaries. Medicare Part D is simply insurance for your medication needs. You pay a monthly premium to an insurance carrier for your Part D plan. In return, you use the insurance carrier’s network of pharmacies to purchase your prescription medications. Instead of paying full price, you will pay a copay or percentage of the drug’s cost. The insurance company will pay the rest.
Late Enrollment Penalty
You may owe a late enrollment penalty if at any time after your Initial Enrollment Period is over, there's a period of 63 or more days in a row when you don't have Part D or other creditable drug coverage. Learn more about this penalty here.
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Two ways you can receive Prescription drug coverage
One way is to enroll in a Medicare Prescription Drug Plan. These plans add drug coverage to Original Medicare, some Medicare Cost plans, some Medicare Private Fee-for-Service plans, and Medicare Medical Savings Account plans. You must have Part A or Part B to join a Medicare Prescription Drug plan.
The second way is to enroll in a Medicare Advantage plan that includes drug coverage, like an HMO or PPO. Through these plans, you receive all of your Part A, Part B, and prescription drug coverage. Medicare Advantage plans that include drug coverage are called MAPD's. To join a Medicare Advantage Plan, you must be enrolled in Part A and Part B of Medicare. Not all Medicare Advantage Plans include drug coverage. You can only add a stand-alone Prescription Drug plan to certain types of Medicare Advantage plans that don't include drug coverage, such as a Private-fee-for-Service (PFFS) plan.
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When can I enroll in a Prescription Drug Plan?
When you first become eligible for Medicare, you can join during your Initial Enrollment Period.
If you get Part B for the first time during the General Enrollment Period.
During Open Enrollment, between October 15th through December 7th.
Any time if you qualify for Extra Help.
What will I have to pay?
Monthly premium- if you have a higher income ($85,000 if you file individually, $170,000 if you're married and file jointly), you will have to pay an extra amount in addition to your plan premium. Usually this will be deducted from your Social Security Check.
Yearly deductible- this is the amount you must pay before your drug plan begins to pay its share of your covered drugs. Some drug plans don't have a deductible.
Copayments or coinsurance- these are the amounts you pay for your covered prescriptions after the deductible.
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Late Enrollment Penalty
The late enrollment penalty is an amount that’s added to your Part D premium. You may owe a late enrollment penalty if at any time after your Initial Enrollment Period is over, there’s a period of 63 or more days in a row when you don’t have Part D or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Part D coverage.
3 ways to avoid paying a penalty:
1. Join a Medicare drug plan when you’re first eligible– Even if you don’t take many prescriptions now, you should consider joining a Medicare drug plan to avoid a penalty. You may be able to find a plan that meets your needs with little to no monthly premiums.
2. Don’t go 63 days or more in a row without a Medicare drug plan or other creditable coverage– Creditable prescription drug coverage could include drug coverage from a current or former employee or union, TRICARE, Indian Health Service, the Department of Veterans Affairs, or health coverage. Your plan must tell you each year if your drug coverage is creditable coverage. This information may be sent to you in a letter, benefit handbook, or included in a newsletter from the plan. Keep this information, because you may need if it you join a Medicare drug plan later.
3. Tell your plan about any drug coverage you had if they ask about it– When you join a Medicare drug plan, and the plan believes you went at least 63 days in a row without other creditable drug coverage, the plan will send a letter. The letter will include a form asking about any drug coverage you had. Complete the form, and return it in your drug plan by the date listed on the from. If you don’t tell the plan about your creditable drug coverage, you may have to pay a penalty for as long as you have Part D coverage.
How much does the penalty cost?
This depends on how long you went without creditable prescription drug coverage. Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” by the number of full, uncovered months that you were eligible but didn’t join a Medicare drug plan and went without creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. This penalty amount may increase each year if the national base beneficiary premium increases. In most cases, you have to pay this penalty for as long as you have a Medicare Drug plan, even if you switch plans.
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"Extra Help"for Part D
Our federal government offers help with paying for your Part D drug plan expenses if you qualify based on income. This is called the Low-Income Subsidy. Anyone can apply for this at Social Security at any time, but help is awarded based on proving low-income and limited resources. You must have an annual income that falls below 150% of the Federal Poverty Level based on your household size.
Extra Help is estimated to be worth about $4,000 per year. Many people qualify for these important savings and don’t even know it.
For more information see:
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