By the year 2030, all baby boomers will be 65 or older. As prescription drugs become a larger proportion of your monthly costs when you age, it is important to understand and explore Medicare health plans that provide coverage for prescription drugs (also known as Medicare Part D), in order to make sure you are appropriately recovered as you enter or reach retirement.
If you are turning 65 soon, this article will answer your questions about Medicare Part D – how to enroll and when is the best time to join.
Medicare Part D – how to enroll?
To start, you have two main options when it comes to Medicare Part D enrollment:
- If you are eligible for Medicare Part A (but not yet enrolled) or already receiving Medicare coverage under Original Medicare (i.e. you are enrolled in Medicare Part A and/or Part B), you can purchase a standalone Prescription Drug Plan (PDP).
- Enroll in a Medicare Advantage plan that includes a prescription drug plan, otherwise known as an ‘MA-PD’ plan.
You can also get buy a PDP if you are enrolled in a Medical Savings Account (MSA), Private-Fee-for-Service (PFFS) plan without prescription drug coverage, or Medicare Cost Plan.
Whichever way you choose, it is important to learn as much as you can about the Medicare Part D plan that you intend on enrolling in to make sure it fits your circumstances.
Who can I enroll in Medicare Part D?
For most people, eligibility for Medicare Part D occurs when you reach the age of 65. However, those younger than 65 can also be eligible for Medicare Part D if they have received Social Security disability benefits for at least 24 months.
Once you are eligible, in order to qualify for enrollment in a standalone Medicare Prescription Drug Plan (PDP), you need to be either eligible for Medicare Part A (even if you are not yet enrolled) or already enrolled in Medicare Part B.
On the other hand, if you are thinking of enrolling in a Medicare Advantage plan which includes prescription drugs (known as an “MA-PD” plan), you can only enroll if you are already enrolled in both Medicare Part A and Part B.
Whether you are purchasing a standalone Prescription Drug Plan (PDP) or enrolling in a Medicare Advantage plan, you will need to be living within your selected plan’s service area.
When is Medicare Part D enrollment?
With Medicare, you are required to enroll in plans during designated ‘enrollment windows’. These enrollment windows occur at different times throughout the year and you should be aware of when these different Medicare Part D enrollment periods occur.
Initial Enrollment Period (IEP)
Most people have Medicare Part D eligibility upon turning 65. However, enrollment can start as early as 3 months before your 65th birthday. The IEP is a 7-month period that starts three months before your birth month and ends 3 months after the month of your 65th birthday.
If this is your first time, make sure to enroll during the IEP to avoid the Medicare Part D penalty. The late enrollment penalty (LEP) is an amount added to your Part D premium if you decide to join a Part D plan after your IEP has ended.
One tip about Medicare Part D and how to enroll without incurring late enrollment penalties. The only time you can delay Part D enrollment without penalty is by having “creditable coverage.” This means having a drug coverage equivalent to Medicare’s standard prescription drug coverage. Usually, you receive creditable coverage from your employer (or your spouse’s employer) if you are working past 65.
Annual Election Period (AEP)
AEP occurs every year and falls between October 15 to December 7. If you did not enroll during IEP, you can do so during the AEP. Here are the basics about Medicare Part D – how to enroll during the Annual Election Period. During AEP, Medicare beneficiaries can:
- Switch standalone Medicare PDP plans
- Switch Medicare Advantage plans (from one without to another with drug coverage, and vice versa or between different plans that have drug coverage)
- Enroll in a Medicare Advantage plan which has prescription drug coverage and leave Original Medicare
- Disenroll from a Medicare PDP completely
Medicare Advantage Open Enrollment Period (MA-OEP)
The annual Medicare Advantage Open Enrollment Period is from January 1 to March 31. This enrollment window is only open for those Medicare beneficiaries enrolled in a Medicare Advantage plan as of January 1 each year. At this time, you can switch MA or MA-PD plans or disenroll from your current MA plan to return to Original Medicare, and enroll in a Medicare PDP.
Special Enrollment Period (SEP)
Other than the above-mentioned periods, you are allowed to join or change your Medicare PDP once a month under certain special circumstances:
- When you relocated to a place outside your plan’s service area
- When your plan discontinues its contract with Medicare
- When you lose creditable coverage
- When your plan’s coverage becomes lower than Medicare’s average prescription drug coverage
- When you move into an institution like a nursing home
- When you qualify for Extra Help
It’s important to keep track of these enrollment periods to know when and how to best enroll in a Medicare Part D plan.
What happens if I’m still working?
As with many Americans, you may decide to continue working past 65. You may be wondering how and when you should start considering enrolling in Medicare Part D.
As mentioned above, you are allowed to delay enrollment in Medicare Part D if you have “creditable drug coverage” from your employer.
It’s important to check when you are turning 65 and annually thereafter that your coverage is still creditable. Otherwise, it is time to enroll in a Part D plan to avoid the Medicare Part D penalty. If you are on an employer’s health plan, you should receive a notice from your employer informing you if your drug coverage is creditable each year in September. If you do not receive this notice, you should contact your employer’s human resources department, drug plan, or benefits manager to check.
What else do I need to know?
Before enrolling in any Part D plan, always make sure your drugs are covered with the plan’s “formulary” which is the list of drugs that each plan will cover. Not all plans cover the same drugs and drug prices for the same drug can vary between different plans so it’s important to shop around for a plan that minimizes your cost.
Now that you know more about Medicare Part D – how to enroll and enrollment periods – remember that your coverage starts only the beginning of the first month after you apply to enroll. Always make sure to shop for your plans before enrolling to make sure you are receiving the best coverage at the lowest cost.
At CoverRight, we’re here to help you find the right coverage that you deserve. Reach out today and start finding the best Medicare plan for you.