You read our first article of the Medicare series and conquered enrolling in Medicare Parts A & B. In addition, everything you have heard about Medicare Parts C & D has your head spinning like that last load of laundry you did. You know you’ve paid into the system but that’s about it, which is understandable as Medicare has a lot of components.
- Do you have Medicare Parts A & B and looking to make an informed decision on drug coverage?
Are you trying to understand if you need Medicare Part D?
- Maybe your parents are approaching age 65 and would never find this blog because they aren’t too tech savvy (they need to know this stuff!).
If you are one of these individuals, read on! If you haven’t yet, please read our article on Signing Up for Medicare Parts A & B. We won’t get into minutia details on all aspects of Medicare, but rather some insight on when/how to sign up for Medicare Part D.
*This article contains a healthy amount of information and we value your time, therefore please skim over the green headings first to find the information you may need.
A Note about Medicare Part D
When you think about Medicare Part D, think “D” for drugs, easy right?
Part D pays for outpatient prescription drugs. Those are the drugs you get from a local pharmacy or from a mail order pharmacy. Part A pays for drugs when you are a hospital inpatient, and Part B pays for drugs administered in a doctor’s office, like chemotherapy infusions. When signing up for a government-approved Part D Prescription Drug Plan (commonly referred to as PDP), you will be buying that plan from a private insurance company. Not to worry, they must be actuarially equivalent to a Centers for Medicare & Medicaid Services defined “standard plan”, but can differ in the plan deductible and co-payments. The costs for Part D include; a monthly premium, a yearly deductible, copayments or coinsurance, and possible costs in the coverage gap aka “Donut Hole” which we won’t get into here.
Rather than signing up for Part D, you can get drug coverage instead through a Medicare Advantage Plan (Part C) that specifically includes it (some don’t). We will touch on in our next article covering Medicare Part C.
You do not have to sign up for Medicare Part D on its own either, however it is advised since you will most likely need prescription drugs one day. If you wait to sign up you will pay permanent penalties, we will touch a little more on this later.
Visual Learners! Here’s how it all comes together:
When to Sign Up for Part D
When determining when to sign up for Part D, there are a few options. Each option depends on your specific circumstances however enrolling in Part D is not required.
Unfortunately, we sometimes see individuals who turn 65, are in good health, and take no medications, that forgo enrolling when they should have. One day, they will most likely get sick or need some sort of medication(s) and that is when they will try and enroll (I thought we were invincible!?). Therefore, they will have gone without “credible coverage” for a 63 day period, which means they will have penalties on their Part D premiums, FOR LIFE!
Do your homework. This is part of your retirement plan, don’t screw it up. You didn’t work your butt off for an eternity to penalize yourself when you should be enjoying yourself.
Initial Enrollment Period (IEP)
This is the same IEP that applies to Medicare Part A & B. The 7-month window around your 65th birthday. Again, that is the 3 months before the month of your birthday, the month of your birthday, and the 3 months after.
Open Enrollment Period
The Medicare Open Enrollment lasts from October 15th to December 7th each year. There are quite a few things you can do during this time. When it relates to Part D, you can:
Sign up for a PDP.
Drop your current PDP coverage.
- Or switch from one PDP to another.
Special Enrollment Period
You may have waited to sign up for Medicare Part D if you were working for an employer with more than 20 employees when you turned 65, and had healthcare coverage through your job or union, or through your spouse’s job.
This SEP occurs during the 63 days (first two months) after you or your spouse’s employer/union or Veteran’s Administration coverage ends, or when the employment ends (whichever is first). There are certain events that trigger other Special Enrollment Periods for Part D, but they pertain mostly to those who already have Part D.
NOTE: Medicare Part D has a different set of rules which are based on what is called “creditable coverage”. Meaning that if you have some sort of prescription drug coverage that is as good or better than Medicare Part D, then you don’t need to sign up just yet. You can wait until you lose your current coverage, and at that time you will want to enroll during either your Initial Enrollment Period (IEP) or Special Enrollment Period (SEP). Otherwise you will pay lifetime penalties on your Part D premiums and have a sizable coverage gap. Examples of plans that are as good as or better can be; retiree plans, union plans, COBRA, VA, etc.
How to Sign Up for Part D
This is the most time consuming part of the Tour de Medicare…thus far. Albeit simple, you will have to do a bit of homework and research on available drug plans in your area, and current drugs you take (if any).
NOTE:This is after you have verified that you want a stand-alone prescription drug plan (Part D), and that you will NOT be enrolling in a Medicare Advantage Plan (Part C) that includes prescription drug coverage. Keep a lookout for our next part of the Medicare series which discusses Part C in detail.
During this process of enrolling in a prescription drug coverage plan, you will need to have your Medicare number and the date your Part A and/or Part B coverage started. This is displayed directly on your Medicare card, which you should have at this point.
You will start by going here, Medicare.gov/find-a-plan to research available plans in your area. Enter your zip code and continue.
Answer the 3 questions that come up on the next screen. In the first question, “Original Medicare” just means “Parts A & B”.
On the next screen you will be able to refine your search by; monthly premiums, deductibles, options, rating, company, etc. It will then show you the available plans in your area based on your search criteria. On the right side it shows the number of Prescription Drug Plans, Medicare health plans with drug coverage, and Medicare health plans without drug coverage that are available. Check the box on the type of plan you want to see and continue.NOTE: Remember a Prescription Drug Plan (PDP) is for those who are NOT going to be looking for a Medicare Advantage Plan (Part C) that already includes drug coverage. If you just want stand-alone drug coverage (Part D), the PDPs are what you will want to choose from. If you are planning on getting a Medicare Supplement (Medigap) plan, you will still want to get a PDP, as Medicare Supplement plans no longer include drug coverage.
You can now see your search results and will be able to see the details of each available plan. This page also gives you the ability to compare them. This is strongly advised. Now, a bit of homework. You will want to click through the plans to get the information you need and will also want to look at each plan’s drug formulary. The formulary is the list of drugs currently covered by the plan. After clicking on any one plan, you can enter in the specific drugs you may already take to see if they are covered. This will be your “Drug List”.
- Once you decide on a plan you would like to enroll in, simply click the “enroll” button on the right of that plan name.
On the following page there are a series of check boxes you need to complete to confirm your enrollment period.
Now you’re on the last leg of the enrollment process. You will input your personal information, review it, then submit it and receive confirmation.
If you need additional help, you can call 1-800-MEDICARE (1-800-633-4227) and they can help answer questions you may have while signing up.
Summary of options when it comes to having prescription drug coverage through Medicare:
Contact us if you want additional information or want to know how transitioning to Medicare will impact your overall financial plan.
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Cameron Valadez is a CFP® Practitioner located in Riverside, CA.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
This is meant for educational purposes only. It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions.
 © Associates of Clifton Park, April 2018
 (When Are Medicare Enrollment Periods?)
 © Associates of Clifton Park, April 2016