Signing up for Part D Medicare can be challenging.
First, you need to ensure you can even enroll for it. Secondly, you can only sign up for it during specific enrollment periods. And lastly, with so many Medicare D options available, how do you know which one is right for you?
Long story short, there are a lot of questions requiring answers.
We’ve put together this comprehensive guide to help you navigate the process of signing up for Medicare part D.
An Overview of Medicare Part D
Medicare is a government-run health insurance program that provides coverage for residents of the United States. Original Medicare comprises Part A and Part B. Essentially, Part A covers hospital expenses, while Part B covers outpatient care, preventative services, and some medical equipment and supplies.
While Original Medicare does cover a lot, there are some things that it doesn’t—one of those being prescription drugs. That’s where Medicare Part D comes in.
Medicare Part D is a voluntary prescription drug benefit available to all Medicare beneficiaries. Enrollment in Part D is optional, and not everyone needs Part D coverage, as some people may already have prescription drug coverage through their employer, a union, or a private health insurance plan.
However, If you don’t have any other form of prescription drug coverage and decide not to enroll in Medicare Part D, you will likely pay a late enrollment penalty if you decide to join later on (we will discuss this in depth later).
You can enroll in a stand-alone Prescription Drug Plan (PDP) or a Medicare Advantage Plan (MAPD) that includes Medicare drug coverage.
Medicare Prescription Drug Plan (PDP)
A PDP is a type of Medicare drug plan that is offered by private insurance companies approved to sell drug coverage. These plans are regulated by Medicare and mandated to meet certain minimum requirements. This is the most common type of Medicare drug plan to supplement Original Medicare. To be eligible for a PDP, you must be enrolled in Medicare Part A.
A PDP will cover some or all of the costs of your prescription drugs and has a monthly premium.
Not all Medicare Prescription Drug Plans are the same—each plan has its own list of covered drugs (called a formulary), which may change from year to year. Some plans may place certain drugs on a tier that requires you to pay a higher coinsurance or copayment. As you shop for a Part D Plan, you will want to have a strategy from how to compare Part D plans and find the one right for you.
Medicare Advantage Plan (MAPD)
The second option is a Medicare Advantage Plan, in this case, one that includes drug coverage. Medicare Advantage Plans are provided by private insurance companies and must be Medicare approved. To be eligible for an MAPD, the person should have both Part A and B.
MAPDs offer Original Medicare coverage and oftentimes more. Medicare Advantage coverage can include prescription drugs, dental care, vision care, and, depending on the plan, even gym memberships. Like PDPs, each MAPD has its own formulary of covered drugs that may change yearly.
Who is Eligible for Prescription Drug Coverage Medicare Part D?
To qualify for Part D coverage, you must first be enrolled in Medicare. So really, the question should be, who is eligible for Medicare?
- US residents ( living in the USA for at least five continuous years) who are age 65 or older
- US residents under the age of 65 but have a qualifying disability
- Any age with End-Stage Renal Disease (ESRD)
United States citizens currently residing outside the country are not eligible but can apply for Medicare upon returning to the States.
What Drugs are covered by Part D?
Part D provides coverage for both brand-name and generic drugs. The drugs covered and the amount you pay for them depends on your plan.
To be eligible for coverage, drugs must be FDA-approved and used for a medically necessary purpose. For instance, drugs used for weight loss or cosmetic purposes are not covered. However, drugs to help with the cessation of smoking are.
Medicare Part D plans are required to include a minimum of two drugs from 148 categories. Plus cover substantially all drugs from six protected categories.
Protected Categories include:
- Immunosuppressant drugs
The formulary – the list of drugs covered by the Medicare drug plan will differ between private insurers. Therefore, choosing a drug plan with a formulary compatible with your requirements is important.
Though the United States government regulates Medicare part D plans, they are not standardized. Each plan is different regarding the prescription medications covered and the cost to the consumer. However, all Medicare drug plans must meet a certain level of minimum benefit.
Formularies are also tiered. The patient’s share of the bill will differ based on which tier their medication is in. Private companies can determine their own number of tiers, but most are broken down into five.
Tier 1 Generic drugs – These often have no copay, which means no cost to the consumer.
Tier 2 Generic drugs and some common brand names – These may require a small copay and often no copay.
Tier 3 Brand name and preferred drugs – Typically, they will have a higher copay. More recently, some insurance companies have made tier 3 a coinsurance tier with the consumer paying 25% of the price. The result is higher out of pocket costs for the consumer.
Tier 4 & 5 Specialty drugs – The consumer will be responsible for a percentage of the cost as co-insurance.
It’s important to note that a drug plan’s formulary can change each calendar year.
When can I sign up for Medicare Part D?
You have two primary windows of opportunity to sign up for Medicare Part D. The first is your Initial Enrollment Period (IEP), and the second is during the Annual Election Period (AEP). Under certain circumstances, you may also qualify for a Special Enrollment Period (SEP).
Of course if you currently have Medicare and move to another state or outside the local service area of your current plan, you will have a Special Enrollment Period (SEP) to get a new plan. When you are moving with Medicare, you have 63-days from your move date to get a new Part D plan.
Initial Enrollment Period (IEP)
The Initial Enrollment Period is the time when you first become eligible for Medicare. For most people, this means age 65. If you’re already receiving Social Security or Railroad Retirement benefits, you’ll automatically be enrolled in Original Medicare Part A and Part B.
If not receiving Social Security benefits, you’ll need to sign up for Medicare through the Social Security Administration.
You can also enroll in Medicare Advantage and prescription drug coverage during the IEP.
The Initial Enrollment Period lasts for seven months – three months before the month you turn 65, the month you turn 65, and three months after the month you turn 65. You can use our handy Medicare Initial Enrollment Period Calculator Here.
The IEP is an important time to sign up for Medicare, so enroll as soon as you become eligible.
Open Enrollment Period
If you didn’t enroll during your Initial Enrollment Period and later decide you want Part D coverage, you can sign up during the Medicare Annual Election Period (AEP) from October 15 to December 7. Then your coverage will begin on January 1 of the following year.
As well as adding drug coverage, during AEP, you can also:
- Join, switch, or drop a Medicare Advantage Plan
- Switch from an Original Medicare to a Medicare Advantage Plan or back
- Sign up for Part A and/or Part B if you didn’t already have them
General Enrollment Period (GEP)
Another opportunity to sign up for Medicare Part B if you missed your IEP is during the General Enrollment Period (GEP). The GEP is in effect from January 1 to March 31 each year. At this time, you can also add stand-alone drug coverage or an MAPD plan when you enroll in Medigap Part B.
Special Enrollment Period (SEP)
You can also sign up for Medicare Part D is during your Initial Enrollment Period. However, if you didn’t enroll in Part D when you were first eligible, there are times when you can still sign up. These are called Special Enrollment Periods (SEPs) and the Annual Election Period (AEP).
Qualifying reasons for a Special Enrollment Period might include:
- Changing residence – If you are moving out of the service area for the plan you’re currently enrolled in, you may be able to join a new plan.
- Losing creditable drug coverage – You may qualify for a SEP if your prescription drug coverage through an employer or union is lost or no longer creditable.
- You’ve moved back to the USA – You have two months from the date you move back to the States to sign up for Part D.
- Moved in or out of an institution – If you move into or out of a skilled nursing facility or long-term care facility, you can join, switch, or drop your Part D plan.
Medicare Part D Late Enrollment Penalty
As previously stated, the ideal time to enroll in Medicare Part D is when you first become eligible. If you don’t enroll in Part D during the IEP and later decide you want coverage, you may have to pay a late enrollment penalty.
The amount of the premium penalty is 1% of the national base beneficiary premium multiplied by the number of full, uncovered months that you were eligible for Part D but didn’t enroll. You will also have to pay this penalty if you go more than 63 days in a row without creditable prescription drug coverage after your initial enrollment period.
At first glance, it might seem like a few dollars isn’t much to worry about. But, the late enrollment penalty is calculated based on the average monthly premium for a basic Part D plan and is applied for as long as you have Part D coverage.
It’s important to note that you may have to pay a late enrollment penalty even if you had other drug coverage, such as through an employer. This is because not all drug coverage is considered creditable.
Creditable prescription drug coverage is coverage that’s at least as good as the standard Medicare Part D prescription drug benefit.
If you have creditable prescription drug coverage when you’re first eligible for Medicare, you can choose to delay enrolling in Part D without having to pay a late enrollment penalty. However, you’ll need to provide proof of your creditable coverage if you do enroll in Part D.
How Do I Enroll in a Part D Prescription Plan?
The first step is to compare plans and find one that meets your needs. Once you’ve selected one, the next step is to enroll. Most Part D plans will allow you to enroll online via their website, phone, mail, or even in person.
Part D Shopper
The other way is to use an independent insurance broker. Using our popular website PartDShopper.com you can compare prescription drug plans in your area and enroll using our easy-to-use consumer-friendly tool.
Just enter your zip code on our site or, even better, create an account for free. We’ll show you all the available plans, as well as provide a step-by-step video guide to help you through the process of choosing the best plan for your needs and enrolling.
The information required once you are ready to enroll will vary by plan, but generally, you will need to provide:
- Your name, address, phone number, and email address
- Your date of birth
- Your Medicare number
- Social Security Number
- The date your Medicare coverage began
- Information about any other prescription drug coverage you have
If you decide you want to switch plans, remember that you can only do so during the Annual Election Period (AEP).
Once you have signed up and paid, you can expect to receive a prescription drug card within two weeks of enrollment.
What are the Costs of Part D Prescription Drug Coverage?
Part D prescription drug coverage costs vary depending on your chosen plan and the required meds. All plans, however, have a monthly premium that you must pay.
There are four stages to Medicare Part D
The first stage is the deductible stage. In this stage, you are responsible for the entire cost of your prescription coverage until you reach the plan’s deductible. Medicare sets the maximum deductible each year; for 2023, it is $505. An insurance company can choose to set a lower deductible but can’t exceed the maximum set by Medicare. Some plans will exempt tiers 1 or tiers 1 and 2 from the deductible.
In this stage, you pay a copay or coinsurance for your prescriptions. As the consumer, you will pay 25% and the insurance company 75% (on average). Once you reach a coverage limit of $4,660, the insurance company no longer participates in the coverage of your prescriptions, and you enter the next stage.
At stage three (the so-called doughnut hole), where your insurance company left off, the pharmaceutical manufacturer picks up. You will pay 25%, the pharmaceutical manufacturer 70%, and Medicare 5%. When your expenses plus that 70% paid by the pharmaceutical manufacturer total $7,400, their role in your prescription coverage ends, and you enter the final stage.
It is estimated an average consumer will be out of pocket approximately $3,100 by the end of stage three. The good news is that a new law starting in 2025 will cap consumer out-of-pocket prescription drug costs to just $2,000.
Don’t worry; this final stage has a bit of a misleading name as your costs are not actually catastrophic! From 2023 Medicare will pay 95% of the costs for brand-name drugs. For generics, you may pay a small copay of between $4.15 and $10.35. As of 2025, the consumer will no longer have to pay the 5%, and all drug costs will be covered 100% by Medicare.
What If I Can’t Afford the Costs of My Prescription Drugs?
Medicare’s Extra Help program is available to assist low-income seniors with the costs of their Part D premiums and prescription copays. Contact your state’s State Health Insurance Assistance Program (SHIP) or Medicaid office to see if you qualify.
Also, bear in mind that as part of the new changes coming in the Inflation Reduction Act, more people will qualify for low-income subsidies. Currently, an individual who makes 135% of the poverty level or better can’t get low-income subsidies, but from 2024, this will be revised for people making 150% of the poverty level or less. So an estimated 400,000 more people will qualify for financial help.
How Medicare Prescription Drug Coverage Works with Other Types of Insurance
You may not need to enroll in a Part D plan if you have creditable prescription drug coverage. Creditable means that the other insurance is expected to pay at least as much as Medicare’s standard prescription drug coverage.
Coverage from one of the following government-sponsored insurances is worthwhile sticking with.
- Civilian Health and Medical Program of the Department of Veterans Affairs
- Federal Employees Health Benefits Program
- Indian Health Services
Do You Need Medicare Part D if You Don’t Have Any Prescriptions?
Medicare Part D can be considered a safety net for those unforeseen prescriptions you may need in the future. Even if you are currently not taking any medications, you may need them down the road, and having this coverage can help save you money. So, even if you don’t currently take prescription medications, signing up for Part D could still be a wise decision.
Final Thoughts on Signing up for Part D Medicare
As you can see, there are several things you should consider before signing up for Part D Medicare. Hopefully, the information we’ve provided has proved useful.
You can learn more about Medicare Part D and compare plans on the Part D Shopper website.
If you have any questions about Part D prerequisites or would like help enrolling, don’t hesitate to contact us, we will be more than happy to help.