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Medicare Part D

This article was updated on: 07/01/2020

As a Medicare beneficiary, you don’t automatically get prescription drug coverage. This Medicare Part D coverage is optional, but can be valuable if you take medications. If you don’t sign up when you’re first eligible, you might have to pay a late enrollment penalty if you decide to enroll later.

Many people are automatically enrolled in Original Medicare, Part A and Part B, when they reach 65 years of age or have certain disabilities. But Original Medicare doesn’t cover your medications (except those you may receive as a hospital inpatient or, in some cases, outpatient).

You can get Medicare prescription drug coverage in two different ways. Both of these are through private insurance companies that contract with Medicare.

  • Through a stand-alone Medicare Part D prescription drug plan—you can add this benefit to your Original Medicare coverage. You can enroll in any Part D prescription drug plan that serves the area where you live.
  • Through a Medicare Advantage Prescription Drug plan—you can get a Medicare Advantage (Part C) plan that includes drug coverage, so that you get all your Medicare benefits under one plan.

When can I sign up for Medicare Part D coverage?

You don’t have to purchase Medicare Part D coverage. That decision will not affect the Original Medicare coverage you have, but it may be beneficial for you to enroll in a stand-alone prescription drug plan or a Medicare Advantage Prescription Drug plan when you’re first eligible. If you choose to enroll later or go 63 days or more without drug coverage, you may have to pay a higher premium for prescription drug coverage, unless you can show that you had creditable drug coverage during the time you were not enrolled in Medicare Part D. Creditable drug coverage is coverage that pays at least as much as Medicare’s standard drug coverage.

You must first have Medicare Part A or Part B to qualify for enrollment in a prescription drug plan and you must have both Medicare Part A and Part B to qualify for enrollment in a Medicare Advantage Prescription Drug plan. The best time to sign up for Medicare prescription drug coverage is usually as soon as you’re enrolled in Original Medicare, during your Initial Enrollment Period (IEP).

You can also sign up for Medicare Part D coverage during the Annual Election Period (sometimes called the “fall open enrollment season”), which runs from October 15 to December 7. During this time period, anyone with Medicare Part A and/or Part B can enroll in a Medicare Part D prescription drug plan or change from one prescription drug plan to another. You can also enroll in or switch Medicare Advantage Prescription Drug plans during this period.

There are some situations that qualify you for a Special Election Period, when you can enroll in a Medicare Part D prescription drug plan or a Medicare Advantage Prescription Drug plan outside of the Annual Election Period.

What’s the coverage gap, and how can I avoid it?

The coverage gap refers to the point when you and your prescription drug plan or Medicare Advantage Prescription Drug plan have spent a certain total amount on your prescriptions; at this point, you’ve reached your initial coverage limit. Now you’re in what’s known as the coverage gap, or “donut hole.” During this phase of your Part D benefits, you pay a higher portion of your prescription drug costs. After you’ve spent a certain amount, you’ll reach the catastrophic coverage phase, and you’ll pay only a small copayment or coinsurance for your medications for the rest of the year.

There are a number of things you can do to help reduce your drug costs. For example:

  • Switch to lower-cost drugs. Talk to your doctor about using generic and/or over-the-counter drugs. Many generic drugs work as well as costly brand-name prescriptions, and this could save you money each year and keep you out of the coverage gap.
  • Ask your plan about prescription mail-order programs. They can save you money on medications.
  • Always use your Medicare drug plan membership card when you get your medications. When using your card, you may be able to get discounted rates on the drugs you buy, and any money spent on drugs automatically counts toward your deductible.
  • Look for programs that offer assistance. The National Patient Advocate Foundation or the National Organization for Rare Disorders may have programs that can help with your drug costs. Comprehensive information about federal, state, and private assistance programs in your area is available from the National Council on Aging.

What does Medicare Part D cost?

Your actual costs for prescription drug coverage vary depending on the following:

  • Prescriptions you use
  • Prescription drug plan or Medicare Advantage Prescription drug plan you choose
  • Whether you go to a pharmacy in your plan’s network
  • Whether your drugs are on your plan’s formulary (drug list)
  • Whether you get Extra Help paying your Medicare Part D costs

One of the costs you should consider is your monthly premium. Most Medicare Part D stand-alone prescription drug plans and Medicare Advantage Prescription Drug plans charge a monthly premium that varies by plan, so you’ll be responsible for paying that premium. Please note that if you’re enrolled in a Medicare stand-alone prescription drug plan and are also enrolled in Medicare Part B, you must also continuing paying your Medicare Part B premium. And, if you’re enrolled in a Medicare Advantage plan (with or without prescription drug coverage), you must continue paying your Medicare Part B premium.

In addition to your monthly premium, your costs for Medicare Part D coverage may include:

  • An annual deductible: This is the amount you pay for your prescriptions before your prescription drug plan or Medicare Advantage Prescription Drug plan starts to share in the costs. Deductibles vary by plan, and it may be possible to find one with a $0 deductible amount.
  • A copayment/coinsurance: This is the amount you pay out of pocket each time you buy a prescription. These costs can vary from plan to plan, and also vary depending on drug tiers and which stage of the benefit you are in at the time of purchase. Drugs in a higher tier tend to cost more than those in a lower tier.

Can I get payment help if my income is low?

Medicare offers a program called Low Income Subsidy, also known as Extra Help, for people with low incomes who qualify. If you are enrolled in Medicare Part D and have limited income and resources, you may automatically qualify for Low Income Subsidy. If you don’t automatically qualify for Low Income Subsidy, you may still apply and be determined to qualify for Extra Help from Medicare. If you do qualify, you’ll get help paying for your Medicare Part D costs, such as the premium, deductible, coverage gap, and cost sharing.

You are deemed automatically eligible for Extra Help if you are in one of the following circumstances:

  • You are entitled to Medicare and get full coverage from a state Medicaid program.
  • You get help paying your Medicare premiums through a Medicare Savings Program
  • You get Supplemental Security Income (SSI) benefits.

If you automatically qualify for Extra Help but don’t enroll in a Medicare prescription drug plan yourself, Medicare will enroll you in a plan so that you’ll get help paying for your prescription drugs. (Medicare will send you a letter telling you when your coverage begins.) However, if you have certain retiree drug coverage from a former employer or union, Medicare will not automatically enroll you in a prescription drug plan. For more information, contact your local Social Security office, or call 1-800-MEDICARE (1-800-633-4228). TTY users should call 1-877-486-2048. You can talk to a customer service representative 24 hours a day, 7 days a week.

If you’re enrolled in, or will soon be eligible for Medicare, and are considering whether one of the Medicare plans could be a good option for you, we can help you compare your options. We're happy to walk you through your options by phone or email you information; you can request that using the links below. If you’d like to get personalized assistance, you can talk to a licensed insurance agent today.

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