What Is Medicare Part D | Prescription Drug Plan
Medicare Part D is a stand-alone, federal prescription drug plan (PDP) offered by private insurance companies to help Medicare beneficiaries cover their outpatient drug costs. These drug plans are typically purchased to go along with your Original Medicare coverage to lower out-of-pocket expenses for all healthcare costs related to your medication.
Relatively young, Medicare Part D plans only became available in 2006. However, even though Medicare’s PDP option has been around for less than a decade, more than 43 million (about 72%)](https://www.ncpssm.org/our-issues/medicare/medicare-fast-facts/) of all beneficiaries are enrolled in Part D plans.
If you are enrolled in Medicare Advantage, there is a chance that you're already covered for your medication needs. If that’s the case, enrolling in Medicare Part D will result in disenrollment from your Medicare Advantage plan.
Who’s Eligible For Prescription Drug Plans?
Eligibility requirements for Medicare Part D fall in line with those of Medicare. Meaning, if you are eligible for Medicare, then you automatically become eligible for prescription drug plans. Keep in mind, if you receive your healthcare coverage through Medicaid, then you will likely be automatically enrolled in a Medicare Part D plan when you become eligible for Medicare.
Do You Have To Pay?
The majority of beneficiaries will have to pay for Medicare Part D plans, although, the cost is typically more affordable than alternatives. While you likely won’t find free Medicare Part D coverage, there are ways to get help paying for your medication through Extra Help. The level of your help will be determined by your income level, and will be the main factor in how much you’ll pay for premiums, deductibles, coinsurance, and more.
How Part D Plans Work
As with most health insurance plans, Medicare Part D works by paying a premium to a private insurance company. In return, your insurance provider will help cover the costs of your prescription medication and afford you access to their network of pharmacies. Even after you are enrolled in a Part D plan, you will still be responsible for some of the cost, which you’ll pay in the form of copayments or coinsurance.
Even though Medicare prescription drug plans are sold by private companies, they are still regulated by the federal government. Medicare Part D insurance providers must submit an outline each year to the CMS to ensure they meet the strict criteria, and only then can they be sold to the public.
Once you enroll in coverage for your medication, you’ll want to have a good understanding of the different components of Part D. Things like your out-of-pocket expenses, initial coverage, coverage gap, and your catastrophic coverage. Each one will determine how much you’ll end up paying for your prescriptions. You can learn more about your different costs here, and learn more about your coverage gap (donut hole) here.
How Your Coverage Works With Other Insurance
Most people understand that Medicare Part D is a stand-alone plan that is purchased by most Medicare beneficiaries. However, what happens if are getting your insurance through other programs? Medicare’s Prescription drug plan actually works with a number of different insurances, and here’s how.
Employer or Union Health Coverage - If you are currently enrolled in health coverage through your, your spouse, or family member’s employer or union, then you’ll need to stay on top of your prescription drug coverage. Your employer, current or previous, will notify you each year about whether or not your drug coverage is considered creditable. Make sure to hold onto the information provided by your employer for a future reference. If you decide to sign up for a Medicare Part D plan, you and your dependents may lose your employer or union health coverage.
COBRA - If you’re currently enrolled in COBRA, and it includes creditable prescription drug coverage, you’ll be eligible for a special enrollment period to enroll in a Medicare Part D plan. Due to your special enrollment period, you won’t be liable for a late enrollment penalty when your COBRA coverage ends.
Medigap with Prescription Drug Coverage - Medicare Supplement policies are no longer allowed to include drug coverage, but some people may be grandfathered in. If you are currently enrolled in a Medigap drug plan, it would be in your best interest to switch over do a Part D plan, and avoid any penalties you may face.
If you do end up changing to a prescription drug plan, your Medigap plan will be required to drop your drug coverage. They will also have to adjust your monthly premium, which should save you some money.
- Medicaid - If you are getting benefits through Medicaid, then your drug costs will be covered by Medicare. Although, you will need to join a prescription drug plan in order for that to happen, or Medicare will automatically enroll you. While Medicare will pay for most of your expenses, you’ll most likely still have to pay a small percentage of the overall cost.
However, if you have full Medicaid coverage and live in a nursing home, Medicare will cover 100% of your prescription drug costs. If you have full Medicaid coverage and live in an assisted living or adult living facility, or a residential home, you’ll still be on the hook for a minor copayment.
Supplemental Security Income Benefits - You’ll automatically qualify for Extra Help for your drug costs if you are getting benefits or help from your Medicaid in paying your Medicare premiums. You’ll need to join a prescription drug plan to get covered, or Medicare will enroll in you in one.
State Pharmaceutical Assistance Program (SPAP) - Each state varies when it comes to their State Pharmaceutical Assistance Program. You will either get extra coverage when you sign up for a Medicare prescription drug plan or get help from a separate state program that helps with prescriptions. You can learn more about your SPAP here.
Long-Term Care Facility - Medicare prescription drug plans have contracts with long-term care pharmacies to cover their residents. If you are soon entering or already living in a nursing home, you have the option of choosing a new prescription drug plan or switching your current one. The reason for this is so you can enroll in a plan that contracts with your long-term care facility.
HUD Housing Assistance - You can opt to join a Medicare Part D plan even if you are getting financial assistance from the Department of Housing and Urban Development (HUD). While you won’t lose your assistance if you qualify for Extra Help, there is a chance your financial assistance may be reduced due to lower drug spending. Although, the Extra Help paying for drug costs will surely offset your decrease in housing assistance.
Food Stamps - Similar to HUD Housing Assistance, if you get food stamps, you can still qualify for Extra Help with your prescription drug coverage. Although your food stamp benefits may be reduced, the Extra Help you get for prescription drug coverage will offset the costs. Please note, if you are near the eligibility cutoff, there is a chance you may lose your minimum food stamp benefits.
Federal Employee Health Benefits (FEHB) Program - If you are enrolled in coverage through the Federal Employee Health Benefits Program, chances are, you’ll already have creditable prescription drug coverage. If you do want to enroll in a Medicare Part D plan, you won’t lose your FEHB drug benefits, and your plan will actually let you know which of your insurance providers will pay first. You can learn more here.
Veteran’s Benefits - If you get your prescription drug coverage through the Veterans Affairs (VA) program, you’ll likely have creditable prescription drug coverage. However, unlike the FEHB program, you can’t use both your Medicare prescription drug plan and VA prescription drug plan for the same medication.
TRICARE (Military Health Benefits) - In order to get prescription drug coverage through TRICARE, you’ll need to be enrolled in Medicare Part A and Part B. If you are, and are currently getting your drug coverage through TRICARE, you don’t need to worry about enrolling in a Medicare Part D plan.
If you are enrolled in a Medicare prescription drug plan and TRICARE drug coverage, and you are active duty, your TRICARE pays for your medication first. If you are inactive, then your Medicare prescription drug plan will pay first.
- Indian Health Services - There are plenty of Indian health facilities that participate in the Medicare prescription programs, which means you don’t have to enroll in a Medicare Part D plan to get your drug benefits. However, if you do join a Medicare prescription drug plan, it will pay your Indian health facility for the cost of your medication, which is extremely beneficial for your local facility.
Is Medicare Part D Mandatory?
Medicare drug plans aren't mandatory unless you're on Medicaid, but you'll be happy you have Part D Medicare if you ever develop a condition that requires regular medication. Because it's subsidized by the government, Medicare drug coverage is often more cost-effective than other prescription insurance plans, especially if you have a lot of medications to pay for.
Why It’s Still A Good Idea To Enroll
Enrolling in a Medicare Part D plan is a crucial step for most Medicare beneficiaries, especially those who are currently being prescribed medication. Your drug coverage will help cover the majority of your prescription costs, saving you a significant amount of money in the long run.
What if you don’t currently take medication?
Well, it’s still a good idea to enroll in Part D coverage as soon as you become eligible. The reason being, you’ll be protected if you ever find yourself being prescribed medication. Additionally, you’ll avoid paying the late penalty for Medicare Part D coverage, which can end up costing you a hefty chunk of change.
Learn More About Medicare Part D With FirstQuote Medicare
If you’re on the fence about whether or not you should enroll in a Medicare Part D plan, it’s best to explore your options with a professional. With FirstQuote Medicare, you can do just that.
We not only make shopping for and comparing Medicare quotes easier than ever before, but we have experienced Medicare agents who can help steer you in the right direction. There is no obligation when you choose to explore your coverage options, and having the conversation is completely free of charge to you!
Medicare Part D coverage varies depending on where you live, so the best way to get started is by entering your zip code. After answering a few additional questions, you’ll be well on your way to either enrolling or getting the advice you were looking for.