Part D – Prescription Drug Plans (PDP)
Medicare prescription drug plans are also known as Medicare Part D. Medicare Part D is a government program that offers prescription drug insurance to everyone eligible for Medicare. Original Medicare (Parts A and B) does not cover most outpatient prescription drugs. Part D is different from Medicare Parts A and B. You’re not automatically enrolled in Part D. To get Part D drug coverage, you must enroll in a plan through a private company like Anthem, Blue Shield, Health Net, etc.
The federal government has created guidelines for the types of brand name and generic drugs that must be covered, along with setting a minimum standard of benefits. Each Medicare Part D plan has a formulary, or drug list, that meets these guidelines, as required by law. However, all plans are not the same. They can vary by cost, formulary or specific drugs covered. If you’re considering a Medicare Part D plan, first review the plan’s formulary to make sure it will meet your prescription drug coverage needs.
You can do a quick and easy search at www.medicare.gov. By providing your current prescriptions, the site will present a wide variety of plans listed in order the most cost efficient.
When can I join or change my drug plan?
Important dates to remember –
1. If you currently have Medicare Parts A and/or B, you can enroll or re-enroll in a Medicare Part D Prescription Drug Plan (PDP) or Medicare Advantage Plan with Prescription Coverage (MA.PD) starting on October 15 through December 7 of each year. This time period is called the Annual Coordinated Election Period and your newly chosen Medicare Part D plan begins on January 1 of the following year.
2. If you turn 65 or become eligible for Medicare outside of the Annual Coordinated Election Period, you have a seven (7) month window in which to enroll in the current year’s plan (2012) and avoid any possible penalties:
– the three (3) months before you turn age 65
– your birthday month
– and, the three (3) months after you turn age 65
Your coverage will begin either on the first day of your Birthday month or the first day of the month after the month in which you join.
The Premium Penalty – The High Cost of Waiting
If time is money, then “Procrastination” also has a price. When it comes to Part D, failing to enroll in a drug plan when you become eligible can be very costly.
The first Medicare Part D Open Enrollment period began November 15, 2005 and ended May 15, 2006. For those missing the May 15 deadline, the total increase for 2006 was an automatic 7% (representing the delay from May to December 2006). This percentage was then multiplied by the average premium cost for Medicare Part D plans (in 2006, this value is around $32.50). This premium penalty is paid each month for a long as the person is enrolled in a Medicare Part D plan.
How does the work? Well, if this year’s average monthly premium for a Medicare Part D plans is $32.50 per month, a person who waited 7 months to enroll in a Medicare Part D plan would add an extra $2.25 per month to their monthly premium (calculated – 1.07 * $32.20 = $34.45 or an additional $27.00 per year). The premium “penalty” will stay in effect for the life of the Beneficiary’s Medicare Part D plan.
Please note, that these penalties may not apply if you currently have drug coverage through a former employer or union considered by the Centers for Medicare and Medicaid Services (CMS) as “creditable coverage”. Also, anyone who qualifies for the “Extra Help” program will not be charged a Late Enrollment Penalty.