Medicare Part D enrollment period – What you need to know
Let us start at the beginning, back when Medicare Part D was created in 2006. If you are enrolled in the original Medicare coverage plan, you now have the option of receiving coverage under the prescription drug plan. In fact, you can enroll in the Prescription Drug Plan the moment you become eligible for Medicare during the initial Medicare enrollment period.
Enrollment period for the Medicare Part D plan
The best time to sign up for a Part D plan is when you first become eligible for Medicare. This is known as the initial eligibility window ad described below:
- Age — The initial enrollment period for a person who is eligible due to age starts three months prior to their 65th birthday. It ends three months after their 65th birthday.
- Disability — The initial enrollment period for a person who is eligible for Medicare benefits due to receiving disability benefits from the Social Security Administration (SSA) or the Railroad Retirement Board (RRB) is three months before the 25th month anniversary of the date that the person started receiving benefits, or the 22nd month. It ends on the 28th month, or three months after the 25th month anniversary.
If a person does not enroll during their initial enrollment period, they can enroll in Part D coverage during the open enrollment period, which begins on October 15 and ends on December 7. Failure to enroll in a Part D plan during the initial enrollment period may result in a penalty fine, though, so it’s best to enroll when first eligible.
There is also a special enrollment period for people who did have prescription drug coverage through a Medicare Advantage plan, but who want to switch to Original Medicare. In this instance, a person can enroll in a Part D plan, without being penalized, from January 1 to February 14.
The purpose of the Part D plan
You will receive assistance in paying for any of your qualifying prescriptions. The plan is designed to lower the out-of-pocket costs associated with prescription drug medications. Your coverage is extended to current and future medications.
Medicare Part D and eligibility
Any person who is eligible for Medicare benefits is also eligible for Part D coverage. You can sign up for Medicare if you meet one of the following conditions:
- You’re 65 or older
- You’ve been receiving disability benefits from the SSA or the RRB
- You’ve been diagnosed with a qualified disease, such as amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s Disease) or End-Stage Renal Disease (ESRD)
As stated previously, a person’s initial enrollment period begins when they first become eligible to enroll in Medicare Part A and B benefits (Original Medicare).
How do the premiums work?
Medicare requires that every person pay a monthly fee, or premium, in order to receive coverage. Medicare Part D plans are offered through private insurance carriers. Therefore, a person will actually pay their premium amount to a private insurance carrier, even if they have Original Medicare (Part A and Part B). If a person has Medicare Advantage (Part C, or MA), the monthly bill for prescription drug coverage will be worked into the total bill.
In addition to the premium assigned by the carrier, a person may also have to pay an additional fee, depending on their income level. The Medicare program determines the monthly fee by examining the person’s federal income tax return from two years beforehand. Higher-income enrollees pay higher premiums.
Here are the income levels and associated fees for the 2019 calendar year, based on 2017 tax returns:
- If you earn up to $85,000 as an individual tax filer or up to $170,000 as joint tax filers, you’ll pay just your plan’s premium.
- If you made between $85,000 and $107,000 individually or had a combined household income of between $170,001 and $214,000, you’ll pay the plan premium plus $12.40.
- If you made between $107,001 and $133,500 individually or had a combined household income of between $214,001 and $267,000, you’ll pay the plan premium plus $31.90.
- If you made between $133,501 and $160,000 individually or had a combined household income of between $267,001 and $320,000, you’ll pay the plan premium plus $51.40.
- If you made between $160,001 and $500,000 individually or had a combined household income of between $320,001 and $750,000, you’ll pay the plan premium plus $70.90
- If you made more than $500,001 individually or had a combined household income of over $750,001, you’ll pay the plan’s premium plus $77.40.
Cost and coverage
The Medicare Prescription Drug program will cover a portion of the cost for your outpatient prescription medications. Many of the plans cover most of the costs for medications. The actual costs vary, and they are dependent on the medications you are prescribed. Other factors affecting costs include your choice of network and the structure of your specific plan.
If your plan does not cover the entire cost of your prescription drug, you may have to pay a coinsurance or copay for your medication.
Some plans require that a person pay a deductible, a set amount of money each year before the plan will start to pick up the costs. Typically, the person has to pay the deductible every single year before their plan will kick in.
There are some plans that do not have a deductible. The amount you pay for your prescription before the coverage kicks in depends on the deductible requirements. Per Medicare requirements, no plan can have a deductible that is more than $415 in 2019. In 2018, the yearly deductible cap was $405.
Coverage in the gap
Most Medicare plans have what is considered a coverage gap. The coverage gap is also called the “donut hole.” When a person is within the donut hole, it means that they have to pay more of the costs associated with their prescription drugs. In 2019, a person will not fall into the donut hole until they, along with the plan, have collectively spent $3,820 on prescription drug costs.
After this point in time, a person who is within the donut hole will have to pay a certain percentage of the costs of their brand name and generic prescription drugs. Before the Affordable Care Act, the person had to pay all of the costs for their prescription drugs while in the donut hole. The new law, however, now requires that the Medicare program pick up more of the costs, so that drugs are more affordable for Americans during this period.
In 2019, Medicare will pay 63 percent of the cost of generic drugs and 75 percent of brand name drugs. Under the Affordable Care Act, Medicare was supposed to decrease the Part D donut hole by 2020 so that the Medicare beneficiary was only responsible for 25% of cost of a brand name prescription drug. The Medicare program was ahead of their goal by one-year and announced that it was closing the donut hole in 2019.
Once you spend $5,100 in out-of-pocket costs in 2019, you are no longer in the coverage gap. Your catastrophic coverage provision kicks in at this point. From then, you are only required to pay a small amount for coinsurance for any additional medication. Consult your explanation of benefits (EOB) to determine your eligibility for the Medicare Part D plan.
How do formularies work?
The formulary consists of lists of all of the drugs that are available under your plan. The drugs are grouped by the condition they treat. All of the drugs are covered if they are considered medically necessary for the patient. There are cases where drugs don’t get covered. The plan usually won’t cover a drug that is not on a formulary. Changes can occur annually, with most typically occurring at the beginning of the year. Drugs can be added or removed from the formulary. Pricing for the medications can be changed. Certain restrictions for drugs may be modified.
A brand name drug can be replaced with a generic counterpart. Drugs not included on the plan can still be prescribed if the physician applies for an exception or registers a plan. You will be notified two months prior to the removal of a medication if one of your prescriptions is being purged from the formulary.
It may be helpful to review the formulary to verify that all of your medications appear on the list before enrolling in a specific plan. Drugs that aren’t covered under the Part D plan include barbiturates. Barbiturates are only covered if the person has epilepsy, chronic mental health disorders or cancer. Certain prescription vitamins and over-the-counter drugs will be covered under Medicaid, the federal health insurance program for low-income individuals and families.
How do the exceptions work for a particular plan?
There are several different types of exceptions available. In the event that your prescription is not located on the list, you may be granted an exception. The exception filed will likely fall into one of several categories:
- As the patient, you can request coverage for drugs not on the formulary.
- You can request that coverage restrictions be waived if there are restrictions on the drug.
- You can request a higher level of coverage for your medication.
- An alternative drug can be requested if a similar drug on the list won’t be as effective in treating the condition.