Part D plans are provided by private insurance companies who contract with Medicare. The following out-of-pocket expenses vary according to plan:
- Formulary (list of pharmacies and drugs covered by plan)
The Enrollment Period
Initial Enrollment Period
This period usually begins at the same time that the Initial Enrollment begins for Medicare Part B. That is, it begins three months prior to your 65th birthday and runs for three months following your birthday. If eligible for Medicare Part A or Part B because of disability, your Initial Enrollment Period will begin on your 65th birthday.
Annual Election Period
If you do not enroll during the Initial Enrollment Period, your next option is to enroll during the Annual Election Period. This period begins October 15 and runs through December 7. In addition to signing up for Medicare Part D, you can also substitute plans during this time or disenroll from your plan. Keep in mind that you will need to pay a late-enrollment penalty if you do not sign up during the Initial Enrollment Period and do not have another form of prescription drug coverage (called creditable prescription drug coverage) for 63 consecutive days.
Special Election Period
Only those with special circumstances are able to sign up for a new prescription drug plan outside of the Initial Enrollment Period or Medicare Advantage Disenrollment Period. The special circumstances include the following:
- Relocating outside of the plan service area
- Moving into a nursing home
- Losing eligibility
The Late-Enrollment Penalty
You will incur a late-enrollment penalty if you go 63 consecutive days without creditable prescription drug coverage. This could happen if you missed the Initial Enrollment Period or if you lost your creditable prescription drug coverage and there is a gap of time before you sign up for a new plan. This penalty will be added to your premium. While Medicare Advantage often covers prescription drugs, Original Medicare Part A and Part B does not. Medicare Part D is a plan that covers prescription drugs. It is an add-on, optional plan, not included when enrolling in Medicare Part A and Part B.
Creditable Prescription Drug Coverage
Creditable prescription drug coverage is insurance that is comparable to the average Medicare Prescription Drug plan. This includes:
- Employer-based health insurance
- United States Department of Veteran Affairs health insurance
- Indian Health Service
If you do have creditable prescription drug coverage in lieu of Medicare Part D, you will not have to pay a penalty.