Understanding Medicare drug plans

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Knowing that your doctors’ bills and hospital costs are covered by health insurance is comforting, but those enrolling in Medicare must also find the right prescription plan. That could mean pairing an Original Medicare plan (Parts A and B) or buying a Medicare Advantage plan with prescription drug coverage.

A person can become eligible for Medicare at age 65 or if they have a qualifying disability such as end-stage renal disease or ALS. The initial enrollment period (IEP) is seven months in length. It begins three months before the enrollee’s birth month, goes through the month of their 65th birthday, then continues for three months. Enrollment may be completed anytime within that window.

For example, if you enroll before your birth month starts, coverage will begin on the first day of your birth month. However, if you enroll during your birth month or later, your coverage will begin on the first day of the upcoming month. So, if your birthday is September 14 and you enroll before September 1, your coverage would begin on September 1. If you were to enroll on September 2, then your coverage would begin on October 1. 

If that window is missed, however, the enrollee must wait until the following annual enrollment period to get on the Medicare bandwagon. Medicare Annual Enrollment runs each year from October 15 to December 7. The only exception is if you have a qualifying life event that would allow you to make changes to your Medicare coverage. Qualifying life events such as a spousal death, moving your primary residence, or you or your spouse change jobs, allow you to change Medicare plans outside of the annual enrollment window.

Medicare coverage components are labeled Parts A, B, C and D. Part A refers to hospital coverage, Part B pertains to doctor coverage. These two parts can be referred to as Original Medicare and are managed by the federal government.

Part C is Medicare Advantage, in which a private insurance company becomes involved in covering the costs. Part D is for prescription drug coverage. Those who have original Medicare must make sure they add Part D coverage to their plan so prescription drugs will be covered.

Original Medicare (Parts A and B) does not cover most prescription drugs and Part D plan enrollment is optional.

Seek expert advice on Medicare prescription plans

Many companies offer independent consulting services to help consumers understand Medicare coverage. Exercise caution if you’re using a broker. Since the broker may benefit financially from your purchase, the person may not always have your best interest in mind.

Each U.S. state also operates a State Health Insurance Program (SHIP), which features a hotline through which Medicare customers, both potential and current, can seek advice. Through phone interviews, counselors will help compare various government-sponsored and private plans at no charge.

A phone counselor can help sort out the particulars. You can also use the Medicare Plan Finder tool.

Consumers should take time to research and examine the details of a plan to see if it fits their needs. Aside from the monthly premium, it’s recommended consumers compare deductibles, copays and coinsurance. High-deductible plans will cost you little in way of premiums, but could result in large out-of-pocket costs.

A plan with low premiums and high deductibles can work if you’re completely healthy and don’t expect to need many healthcare services over the next year. But remember that we never really know what our health will look like. We can start a year healthy and wind up in the hospital. Keep that in mind when choosing a plan.

Also, check to see that your medications are covered.

Make sure the medications you take are included on the formulary, or approved drug list, without a prior authorization or step therapy requirement. You may have to pay out-of-pockets costs if medications aren’t on the list. If your drugs aren’t listed but you like the other components of the plan, see if the same drug is offered under a different name.

Also check to see which pharmacies work within your provider’s network as some plans have preferred pharmacy networks. By visiting preferred pharmacies, members can typically access drugs at the lowest cost. Other plans may offer a mail-order option, which may reduce copay costs and make it more convenient for beneficiaries to receive their drugs.

Medicare drug plan costs remain relatively steady

Medicare drug plans have varying monthly fees that are paid in addition to Part B premiums. 

The exact cost depends on multiple factors, including:

• Your prescriptions
• The plan you choose
• Whether you go to pharmacy in your network
• When you use the plan’s formulary

If you meet certain resource and income limits, you may be eligible for help to pay the costs of a Medicare drug plan.

When comparing plans, costs go up proportionally with the number of options offered within the plan. It is important to choose a plan that suits your needs.

Plan ahead for future health

It is wise to purchase a drug plan when you initially sign up for Medicare. If you enroll late for Part D coverage, a penalty will be added to your Part D monthly premium. If you go without Part D or a creditable prescription drug plan for a period of 63 days or more after your initial enrollment period is over, you may be charged a late fee penalty when you do then add a Medicare drug plan. The penalty will continue for as long as you have a drug plan.

Many new enrollees choose not to include drug coverage because they take few or no medications. However, if a condition develops rapidly outside of the enrollment window, the enrollee could find himself quickly amassing out-of-pocket bills. Industry experts agree it is best to have basic drug coverage at minimum.

Medicare Part D can be a critical part of coverage if you have Original Medicare. Make sure you compare Part D costs to Medicare Advantage options when you quality for Medicare and during each open enrollment.

Disclaimer: 

Insure.com is not affiliated with or endorsed by the government or Federal Medicare program. Plans are insured or covered by a Medicare Advantage organization with a Medicare contract and/or a Medicare approved Part D sponsor. Enrollment in the plan depends on the plan’s contract renewal with Medicare. We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov  or 1-800-MEDICARE (TTY 1-877-486-2048), 24 hours a day/7 days a week, to get information on all of your options. Not all plans offer all of these benefits. Benefits and availability may vary by carrier and location. Limitations and exclusions may apply. Every year, Medicare evaluates plans based on a 5-star rating system. Part B Premium give-back is not available with all plans. Actual Part B premium reduction could be lower. Deductibles, copays and coinsurance may apply. 

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