At some point, unless you don’t have prescription drug care through your former employer, you will need to pick a Part D Medicare prescription drug plan.
Selecting the right part D prescription drug plan is a major decision. Picking the wrong one could cost you thousands over your lifetime. Fortunately, choosing the right one can be easy.
Here in this article, we discuss how to pick the right part D Medicare prescription plan in 4 easy steps.
How To Pick The Right Medicare Part D Prescription Plan
We outline how to pick the right Medicare Part D plan in 4 steps.
Step #1 – Know Your Initial Eligibility
Two situations exist when selecting your part D plan for the first time.
The first one is when you turn age 65. Your part D Medicare prescription drug eligibility is a 7 month period which begins 3 months before the month you turn 65, the month you turn 65, and the 3 months after the month you turn 65. See the diagram below.
This period is known as your initial enrollment period (IEP).
You don’t have to enroll in a Part D prescription drug plan at this time if you are still working. But, you have to have health / prescription drug coverage through your employer (or spouse’s). Moreover, the drug coverage must meet creditable coverage. This is the second option. If you are still working and have creditable coverage, you can delay your enrollment upon retirement. Your enrollment period lasts 2 full months from the day you end your employer coverage.
If your (or your spouse’s) drug coverage does not meet the definition of creditable coverage, you WILL need to enroll in part D prescription drug plan at age 65. If you don’t, you will face a late-enrollment penalty when you do decide to enroll in a Part D prescription drug plan.
The current late enrollment penalty is 1% X the national base beneficiary premium X number of full, uncovered months. You can think of the national base beneficiary premium as an average. This premium generally increases each year, and so will your penalty! So, you will want to make sure you enroll at the right time.
It’s imperative you check with your employer or your spouse’s employer to make sure your prescription drug coverage is creditable coverage.
Step #2 – Know Your Prescription Drugs
If you take prescription drugs, you should know if they are generic or not. You should have a good idea of how much you are spending yearly. If you don’t, your insurance carrier or your pharmacy should have a portal on its website where you can check.
Knowing how much you have been spending puts you in a position to potentially lower your drug costs.
We’ve worked with Medicare beneficiaries for awhile now. I am always amazed when beneficiaries don’t know how much they are spending on their prescription drugs. Knowing so can save you a lot of money.
Step #3 – Compare Plans
The part D prescription drug plan market is very competitive. Carriers want your business. However, many specialize as well. For instance, some plans predominantly focus on the generic drug markets. Other carriers help Medicare beneficiaries save money through the “donut hole”.
By knowing where you are cost-wise from step #2, you can make informed decisions on the right plan. And, where can you find the right plan? Medicare.gov has a nice plan finder (although in 2019, it was greatly modified).
You can input the pertinent information and up to 25 prescription drugs. The finder will then create a list of the plans in your area and the corresponding, estimated out of pocket costs for you. It is good to verify the drug cost information by contacting the carrier.
Step #4 – Enroll And Make Changes As Necessary
As we mentioned, you can enroll during your initial enrollment period. If you have creditable coverage elsewhere, you can defer your enrollment penalty-free until you are ready to enroll.
If you don’t enroll when eligible or have creditable coverage, you will face a late enrollment penalty. This penalty is 1% X the national base beneficiary premium X number of full, uncovered months.
If you do have employer creditable coverage, you will have a special enrollment period when you are ready to sign up for part D Medicare prescription drug plan.
Every October 15 through December 7th, you can make changes to your Part D Medicare prescription drug plan penalty-free. This period is the annual open enrollment period (AOP or AEP). This timeframe is the time to make any changes. Do you know if your drug tiers changed? For example, many plans change formularies and premiums. Is your current plan the best one for your needs and budget? By assessing your situation, you can determine if your current plan is the right one for you.
Your new coverage takes effect on January 1st of the ensuing year.
Now You Know How To Pick The Right Medicare Part D Plan In 4 Steps
We hope you see now that selecting the right part D Medicare prescription plan is a straightforward process. Selecting the wrong one could have disastrous financial consequences to your purse or wallet.
Don’t feel like doing this or are you still unsure about the process? Contact us or fill out the form below. Yes, we are an insurance agency. We would earn a commission for any business transacted. However, we know the market. We know it can be confusing. You can be sure the recommend plan matches your needs and budget. As we discuss in all of our articles, we have duty of care to make sure our recommendations are consistent with your situation. We take that responsibility seriously.