Medicare Part D (Prescription Drug Coverage) at a Glance
Medicare Drug Plans: Medicare drug plans are managed by private insurance companies in partnerships with pharmacies. This coverage can be obtained two ways: If you have original Medicare (Parts A & B), you can enroll in a separate Part D plan. If you have a Medicare Advantage plan (Part C), prescription drug coverage often is included in the package.
Monthly Premiums: Premiums and price lists (called Formularies) differ with each plan. The least expensive monthly premium is often not the most cost effective alternative.
Penalty: There is a penalty for not enrolling in a Part D plan when you are first eligible to do so, unless you have an acceptable alternative.
Alternatives: Acceptable alternatives are available through the VA, or through an employer's or union's insurance plan.
A Closer Look at Medicare Part D
Medicare Part D is different from Parts A & B, and enrolling is different from the process for a Medicare Supplement plan.
Part D is Different
- Part D is different from the other parts of Medicare, in two ways: First, the Plans normally require a calendar year commitment (January 1 through December 31). Each year, from about the middle of October to the middle of December, individuals can reevaluate their Part D options and make a switch for the following calendar year.
- The second way that Part D is different is that the benefits are less standardized. Pharmacies and insurance companies pair up and define specific price lists, called Formularies. Each formulary is unique. The cost to consumers of any particular Part D plan consists of two factors; the monthly premium, and the out-of-pocket cost of their specific prescription drugs. Consequently, nobody can point to a particular Part D plan and say that it is "best" for everyone.
There's Help to Find the Right Plan
- Fortunately, the Medicare folks have developed a very good web site to help select an appropriate Part D plan for individual consumers. Click on this link to view a selection procedure for an appropriate Medicare Part D plan, and then link to the Medicare.gov web site to execute that procedure.
There's a Penalty for Not Enrolling
- Unfortunately, Medicare Part D is not exactly voluntary. Individuals who are eligible for Medicare are subject to a penalty if they are not enrolled in a Part D plan, or do not have equivalent coverage from some other source, such as the Veterans Administration or a spouse's major medical insurance coverage. The penalty is calculated based on the number of months that an individual could have had the coverage, but did not have the coverage. Here is a link to a more detailed description of the Medicare Part D Late Enrollment Penalty.