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If you are on Original Medicare, your plan will cover most of your health expenses, but prescription drugs are not included. Medicare Part D provides a solution for people who want to add prescription drug coverage to their Medicare plan. However, Medicare Part D enrollment is limited to specified periods, so it is important to know when you can apply.
When is Medicare Part D open enrollment?
There are different ways that you can enroll for Part D Medicare. These include:
1) Initial Enrollment Period
The first opportunity for Medicare Part D sign-up is when you initially become eligible for Medicare. If you are turning 65, you can enroll for Part D coverage during the seven-month period starting three months before the month you turn 65.
For those who are eligible for Medicare due to a disability, you can enroll for Part D prescription coverage during the seven-month period starting three months before your 25th month of disability.
2) Open Enrollment Period
If you did not enroll for Part D when you first became eligible for Plan D, you have the opportunity to join a plan during the Open Enrollment Period. The Medicare Part D open enrollment period runs from the 15th of October to the 7th of December every year.
This means that Medicare Part D open enrollment for 2024 lasts from October 15, 2023, to December 7, 2023. During this open enrollment period, you can enroll for Plan D for the first time, switch your existing Plan D, or drop your Plan D coverage.
If you enroll for Plan D during the Open Enrollment Period, your prescription drug coverage will start on January 1st next year.
3) Medicare Advantage Open Enrollment Period
If you are on Medicare Advantage, you can enroll for Plan D during the Medicare Advantage Open Enrollment Period, which runs from January 1 to March 31 of each year.
During this period, you can:
· Drop your Medicare Advantage Plan and return to Original Medicare with or without Plan D prescription coverage;
· Switch your Medicare Advantage Plan;
4) Special Enrollment Periods
In some cases, you may be able to apply for Part D coverage outside of the dedicated enrollment periods. Some of the special circumstances where Special Enrollment may apply include:
· You move to an area that is outside your plan’s service area or where there are more plan options;
· You move back to the U.S. after living abroad;
· You are released from jail;
· You become eligible for Medicaid;
· You are eligible for extra help with Medicare prescription drug costs;
· You are in a skilled nursing facility or in long-term hospital care;
Medicare Part D late enrollment penalty
In cases where you do not have drug coverage either from Medicare or a private healthcare plan for more than 63 consecutive days, a late enrollment penalty is added to your Medicare Part D premium.
The cost of the late enrollment penalty that will be applied to your Part D premiums will depend on the length of time you were without creditable prescription drug coverage.
Medicare will typically calculate the late enrollment penalty by multiplying 1% of the national base beneficiary premium ($34.50 in 2024) times the number of months you did not have either Medicare Part D or other creditable prescription drug coverage. For instance, if you didn’t have coverage for 24 months, the penalty would be calculated as $34.50 multiplied by 0.24, resulting in a monthly penalty of $8.28.
Since the national base beneficiary premium can vary from year to year, the Part D late enrollment penalty may vary depending on the rate that particular year.
How to avoid Medicare Part D late enrollment penalty?
A late enrollment penalty is applied permanently to your Part D Plan premium, so it is best to ensure that you do not incur this penalty. You can avoid paying penalties for your Part D prescription coverage in the following ways:
1) Enroll in Medicare drug coverage when you’re first eligible: If possible, it is best to enroll for Medicare Part D when you first become eligible. This will ensure that you do not have a lapse in your credible prescription drug coverage so you will not attract a late enrollment penalty.
2) Enroll in Medicare drug coverage if you lose other creditable coverage: If you had prescription drug coverage from a union or employer then you lose it, it is best to enroll for Medicare Plan D or a Medicare Advantage with drug coverage. This will ensure that you do not go without credible prescription drug coverage for 63 or more days which is the threshold for attracting a late enrollment penalty.
3) Keep records of other creditable drug coverage: To avoid the late enrollment penalty, you need to provide information about your previous drug coverage plans. You will not incur a penalty if you can show that you have had credible prescription drug coverage from a union, private provider, or other sources.
How does Medicare Part D work?
You will need to pay an annual deductible before your coverage kicks in. The maximum deductible for 2024 plans will be $545 (compared to $505 in 2023). Some plans may charge less, but more and more are using this maximum figure.
Once you’ve spent this much, your Part D insurance will take effect. This is where different plan co-pays can make a big difference in your out-of-pocket costs. Most Part D plans put their covered drugs in one of five pricing tiers — preferred generics, other generics, preferred branded drugs, other branded drugs, and expensive specialty medications.
When you use Medicare’s Plan Finder to evaluate Part D plans, it should reflect how a plan’s pricing structure will affect out-of-pocket costs for the medications you take. If there is a price variation among plans for the cost of your drugs, it’s likely because of differences in their pricing tiers. If there’s a really big difference, it’s likely the plan doesn’t cover one or more of your drugs and will charge you the full retail price all year.
What are the benefits of shopping around during Medicare Part D Open Enrollment?
All Part D plans operate under the same general rules, but this doesn’t mean they’re all alike. Far from it. Plans may charge different premiums and co-pays. They can charge different amounts for the same drugs. They may have different preferred pharmacy networks.
Since total out-of-pocket drug costs are still a major concern for most Medicare beneficiaries — especially those who take expensive medications — shopping around and verifying whether your plan is still the most beneficial for you can help you save money in the long run.
Questions about Medicare?
Shoot us an email at medicare@hihella.com.
Article updated on October 30, 2023.
