If you’re enrolled in Original Medicare, you’ll probably want to also select a Medicare Part D plan to cover your prescription drugs. 37 million Medicare beneficiaries were enrolled in prescription drug coverage in 2014, and about two-thirds of them had their coverage through a stand-alone Part D plan (the other third had Medicare Advantage plans that included prescription coverage).
Original Medicare (Parts A and B) do not cover outpatient prescriptions, but that’s where a Part D plan comes in. Medicare Part D was created by the Medicare Modernization Act of 2003, and the first plans took effect on January 1, 2006. Originally, Part D plans included a sizable “donut hole” during which enrollees had to pay the full cost of their drugs until they had reached the catastrophic coverage threshold. The ACA addressed this problem however, and the donut hole is gradually closing – by 2020, it won’t exist anymore, and enrollees will simply pay 25% of the cost of their medications until they reach the catastrophic coverage threshold.
When am I eligible for Part D?
The enrollment window for Medicare Part D is the same as Original Medicare: It’s a seven month window that includes the three months prior to the month you turn 65, the month you turn 65, and the three following months. If you choose a plan during the first three months of your enrollment window, your prescription coverage will be effective the first of the month you turn 65.
If you’re enrolling in Medicare because of a disability, your enrollment window for Medicare Part D begins three months prior to the start of your 25th month of disability (when you’ll be eligible to begin receiving disability benefits), and continues through the 28th month of disability.
If you’d rather have coverage through Medicare Advantage, you have the option of selecting a Medicare Advantage plan that includes prescriptions. In most cases, you cannot buy a stand-alone Medicare Part D plan if you’ve got Medicare Advantage coverage.
There’s an open enrollment period for Medicare Part D each fall, from October 15 to December 7. During that time, you can switch to a new prescription drug plan, or enroll for the first time if you didn’t enroll when you were first eligible (there’s a late enrollment penalty in that case). Coverage selected during the open enrollment period become effective January 1 of the following year.
If you’re enrolled in Medicare Advantage and want to switch to Original Medicare, you can do so during the Medicare Advantage disenrollment period, from January 1 to February 14. If you switch to Original Medicare during that time, you also have the opportunity to select a prescription drug plan as long as you enroll by February 14 (coverage will take effect the month after you enroll).
What do Medicare Part D plans cover?
Each plan has its own formulary (covered drug list), which means it’s important to double check your medications against the plan’s formulary before you enroll. The formularies can change from one year to another, so it’s important to check again each fall during the open enrollment period to see if a better option is available.
If your Medicare Part D plan has a deductible, it will likely be $320 in 2015 (there are a few Colorado plans with lower deductibles, and lots of plans with no deductible at all). After that, you’ll pay 25% of the cost of your medications and the plan will pay the rest. But once your drug costs have reached the lower threshold of the donut hole ($2,960 in 2015), you’ll begin to pay more for your medications. In 2015, you’ll pay 45% of the cost of brand name drugs and 65% of the cost of generic drugs, until the total cost of your medications has reached $4,700 (before the ACA, beneficiaries paid 100% of their drug costs when they were within the donut hole).
Once your total drug costs have reached the upper limit of the donut hole, you’re in the catastrophic coverage range and you’ll only pay 5% of the cost of your medications (or $2.65 for generics and $6.60 for brand name drugs, whichever is greater).
How much do Medicare Part D plans cost?
In 2015, Medicare Part D premiums in Colorado vary from about $15 per month to about $131 per month. You can call us if you’ve got questions about which plan would be the best option for you. And remember, when you select a plan, you’re not locked into it forever; you’ll have a chance to change to a different plan during the open enrollment period from October 15 to December 7.