Medicare Part D: The Basics
Medicare eligibility begins at 65. Most older adults approaching 65 feel overwhelmed when it comes to signing up for Medicare coverage. Learning about enrollment periods, the parts of Medicare, and plan options can be stressful. On top of that, many seniors are surprised to find out that prescription drugs are not covered by Original Medicare (Part A and Part B). This comes as a shock to many, especially those who regularly take medications. Prescription drug use has increased dramatically among older adults with around 25% of individuals aged 65-69 taking at least 5 medications for chronic illnesses or conditions. Having prescription drug coverage can be important to a Medicare enrollee, but how do you get it? One way is through a Medicare Part D plan.
Medicare Part D is the part of Medicare that provides prescription drug coverage. Unlike Original Medicare, enrollment for Medicare Part D is optional. However, not enrolling in a Part D plan when you are first eligible can require you to pay penalties if you decide to add drug coverage in the future. Having a complete understanding of the ins and outs of Medicare Part D, including when to enroll, will ensure you avoid future costly mistakes while finding quality coverage for your prescription drug needs.
What is Medicare Part D?
Before we discuss when to enroll in Medicare Part D, it’s important to first understand what Medicare Part D is. Medicare Part D is the part of Medicare that helps Medicare beneficiaries pay for some or all of their prescription drug costs. Part D plans are offered by private insurance companies as stand-alone prescription drug plans. When you sign up for a Part D plan, you pay a monthly premium to your insurance carrier and in return, you receive access to retail prescription drugs at a more affordable price.
Who can Enroll in Medicare Part D?
A Medicare Part D plan is available to anyone who is eligible for Medicare. However, you must be enrolled in Original Medicare (Part A and Part B) or a Medicare Advantage plan to enroll in a Part D prescription drug plan. It is important to note, enrolling in Original Medicare does not automatically enroll you in a prescription drug plan. You will need to enroll in prescription drug coverage in addition to Original Medicare. Lastly, you must also live in the Part D plan’s coverage area to be eligible. While enrollment for Medicare Part D is not mandatory, you may face a penalty later down the road if you decide to enroll after you first become eligible. Even if you are not taking prescription drugs today, you should consider enrolling in a plan to avoid future late enrollment penalties.
Medicare Part D Enrollment Periods
There are a few specific enrollment periods to be aware of when signing up for a Medicare Part D plan:
✅ Initial Enrollment Period (IEP)
The Initial Enrollment Period is your first opportunity to enroll in a Medicare Part D plan. This enrollment period runs for 7 months which includes:
- 3 months before your 65th birthday
- Your birth month
- 3 months after your 65th birthday
For example, if you turn 65 in June, you can enroll in a prescription drug plan as early as March and as late as September.
✅ Annual Enrollment Period (AEP)
If you missed your Initial Enrollment Period and you wish to enroll in a Medicare Part D plan, you will need to do so during the Annual Enrollment Period. The Annual Enrollment Period runs every year from October 15 – December 7. Coverage for plans chosen during this time will begin on January 1. During AEP, you can:
- Enroll in a Medicare drug plan
- Disenroll in a Medicare drug plan
- Change a Medicare drug plan
- Switch from a Medicare Advantage plan that includes prescription drug coverage to a Medicare Advantage plan that doesn’t
✅ Special Enrollment Period (SEP)
The Special Enrollment Period allows enrollment for Medicare Part D under specific individual circumstances. The most common reason for enrolling in a Medicare Part D plan during a Special Enrollment Period is loss of employer coverage. You may also qualify for a SEP if:
- You change where you live
- You lose your current coverage
- You have a chance to get other coverage
- Your plan changes its contract with Medicare
- You qualify for Extra Help
- Other special situations
✅ 5-Star Special Enrollment Period
The 5-Star Special Enrollment Period allows individuals already enrolled in a Medicare Part D plan the opportunity to switch to a better-rated plan in their area if one becomes available. This opportunity can only be used once a year and is available anytime outside of the Annual Enrollment Period.
Medicare uses customer satisfaction surveys and other details to determine the overall quality of a prescription drug plan. The plan is then given a star rating from 1-5. Plans with a 5-Star rating are considered excellent. Unfortunately not all areas have 5-Star rated prescription drug plans, but if one becomes available in your area you can use this enrollment period to switch to the better plan.
How to Enroll in Medicare Part D
Enrolling in Medicare Part D is simple. However, before you begin the enrollment process it’s important to shop and compare plans to ensure you receive the right coverage for your needs. Here are some questions to consider before enrolling in a Part D plan
- Are my prescriptions on the plan’s formulary (drug list)?
- How much will my copayment or coinsurance be with this plan?
- Can I fill my prescriptions at my regular pharmacy?
- How much will I pay for monthly premiums and the annual deductible?
- Can I get prescriptions by mail?
- How much will I pay during the coverage gap or “donut hole” phase?
Once you have determined which plan is the best fit for your needs you can start the enrollment process. Medicare Concierge can connect you with an agent that can help you enroll in a Part D plan. However, there are several ways to enroll in a Part D plan
Licensed insurance agents are a great resource to use when comparing, shopping, and enrolling in prescription drug coverage. A licensed insurance agent can provide you with multiple plan options and help you determine which coverage is right for you. This is a great choice for someone who is confused about the enrollment process or overwhelmed with plan options. The best part, their service comes at no cost to you.
What Happens if I don’t enroll in a Part D plan when I’m first eligible?
If you miss your Initial Enrollment Period or decide to delay Part D enrollment, you will have to pay a late enrollment penalty for each month you went without prescription drug coverage unless you
- Can prove you had creditable prescription drug coverage either through employer coverage or with an individual plan that is equal to or better than a Medicare prescription drug plan
- Qualify for Extra Help
- Can prove you received misleading information about whether your drug coverage was creditable.
The late enrollment penalty is a permanent amount added to your Part D monthly premium. The cost of the penalty depends on how long you went without prescription drug coverage. Medicare calculates the penalty by multiplying 1% of the “national base premium” ($33.06 in 2021) by the number of full months without prescription drug coverage.
Here’s an example of what a late enrollment penalty could look like for someone who went without prescription drug coverage for 40 months:
.40 (40% Penalty) x 33.06 (2021 Base Premium) = $13.22
$13.22 rounded to the nearest $0.10 = $13.20
Late Enrollment Penalty for 40 Months = $13.20/month
Appealing a Late Enrollment Penalty
Medicare Part D enrollees have the right to appeal a decision they believe to be wrong about a late enrollment penalty. Common reasons individuals appeal a decision include
- An error in calculating the months without creditable drug coverage
- They failed to receive a notice that their other drug coverage was not creditable
- They are enrolled in the Extra Help program
- The end date of the Initial Enrollment Period (IEP) was not correctly identified
To appeal a late enrollment penalty, follow instructions printed on your late enrollment penalty notice or contact Medicare. Appeals must be filed within 60 days of receiving a penalty notice.
Medicare Part D Enrollment FAQs
Should I enroll in Medicare Part D if I don’t currently take any medications?
This is a very common question many seniors struggle with. Because enrollment for Medicare Part D is optional you can choose to delay coverage. However, if you delay enrollment in a Medicare Part D plan, you will have to pay a late enrollment penalty once you sign up for coverage. This enrollment penalty is a permanent penalty that is added to your monthly premium.
By not enrolling in a Medicare Part D plan when you are first eligible, you also risk paying high out-of-pocket costs for unexpected future health issues that may require medication. After the Initial Enrollment Period, enrollment in Part D is limited to the short time frame during AEP (Oct. 15 – Dec. 7), if you were to require an expensive medication in March you would be responsible for the full cost until January 1st of the following year.
Instead of delaying enrollment, it is recommended you choose a Part D plan with very low costs for peace of mind. Enrolling in a low-cost Part D plan will avoid a late enrollment penalty while offering protection in case of an unexpected health issue.
Do I need to enroll in the same Medicare plan as my spouse?
There is no need to join the same Medicare Part D plan as your spouse. Medicare is an individual health plan, there are no joint plans. When choosing a Part D plan it is important to consider your individual health needs. While one plan may work well for you, it may not work for your spouse.
Do I have to enroll in Medicare Part D to keep Original Medicare (Part A and Part B)?
No. Enrollment in a Medicare Part D plan is optional. However, to enroll in a prescription drug plan you must first enroll in Original Medicare or a Medicare Advantage Plan.
Where can I get help with choosing a Part D drug plan?
Before enrolling in a Medicare Part D drug plan, it is important you feel comfortable with your decision. There are various resources you can utilize to gather more information, like Medicare.gov and The Medicare Rights Center to name a few. Another way to get help choosing a Part D drug plan is by consulting with an independent licensed insurance agent. Medicare Concierge can help connect you with an licensed insurance agent or direct you to online resources to enroll online. Independent licensed insurance agents represent multiple plans which allow them to give an unbiased opinion on your health plan choices. Because they represent many carriers, they have a better understanding of how each plan compares to the next. Most independent licensed insurance agent services are free, so there is really no downside to using their services.
Do you need to enroll in a Medicare Part D plan but confused about where to start? We can help you. All advisors provide plan information to assist you in selecting the best plan to fit your needs.