It is important to know that Original Medicare does not include Medicare Part D — Medicare’s prescription drug benefit.
Part D is a standalone plan offered through private insurance companies approved and contracted with Medicare. Plans must follow certain rules such as minimum benefits, maximum deductibles, and etc.
If you are turning 65 or otherwise about to find yourself enrolled into Medicare for your primary source of healthcare coverage, you need to make some important decisions regarding your prescription drug coverage.
Enrolling in Medicare Part D
When you first become eligible for Medicare, you have a seven-month time period to enroll in a Part D plan. This is called your initial enrollment period. Your IEP begins three months before your 65th birthday and ends three months after your 65th birthday.
This is the best time to enroll in a plan because if you don’t, you will have to wait for an annual election period to enroll. That means you could be without drug coverage for months. Also, you will be assessed a late enrollment penalty unless you had other creditable drug coverage. We’ll get into that more later.
Annual enrollment begins October 15th and ends December 7th. Coverage will begin January 1 the following year.
If you have missed these enrollment periods and need to enroll as soon as possible, don’t worry! There are scenarios that trigger special enrollment periods for individuals. Be sure to ask our Expert Insurance Team if you can still enroll in Medicare Part D!
Late Enrollment Penalty
If you miss your initial enrollment period and did not have creditable drug coverage for a continuous period of 63 days or more you will be subject to a late enrollment penalty.
The amount you pay depends on the number for months you did not have creditable coverage. The penalty is calculated by multiplying 1% of the national base beneficiary premium times the number of months you did not have Part D or other creditable coverage. Then, the number is rounded to the nearest 10 cents. In 2020, that amount is $32.74.
So, if you are eligible for a Part D plan in 2020 but decide not to enroll and do not have other creditable coverage for the entire year this is how your penalty breaks down: 1% times 32.74 equals 0.3274. Multiply that by 12 and you get 3.9288. Your penalty is $3.90. That penalty is applied to your monthly premium for the remainder of your life.
New in 2020
If you have Part D already and are looking for the new information on 2020 Medicare Part D Plans, we’ve got all the new information right here:
- The deductible has been raised from $415 to $435
- The coverage gap — the period in which you pay a percentage of the cost of your medication — has raised from $3,820 to $4,020
- However, the percentage you pay for generic medications has gone down from 37% to 25%. That makes it 25% for both brand-name and generic.
- Out-of-pocket threshold has raised from $5,100 to $6,350. That is when you become eligible for Medicare covering at least 95% of the cost of your medications for the rest of the year.