At some point, unless you don’t have prescription drug care through your former employer, you will need to select 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, we discuss how to pick the right part D Medicare prescription plan in 4 easy steps.
Step #1 – Know Your Eligibility
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 end 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, you have health / prescription drug coverage through your employer (or spouse’s), AND the drug coverage meets creditable 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 this time. 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.
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.
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. Others are designed to 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. 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 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. This special enrollment period is 8 months after for coming off creditable coverage. However, you will want to sign up as soon as you can.
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). If your prescription drug needs changed during the year, 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 effective date is January 1st of the ensuing year.
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.