Written By: Nathan Hess | Licensed since 2012 Print
Medicare Coverage Basics
What is Medicare Part D prescription drug coverage?
As a Medicare beneficiary, you don’t automatically get prescription drug coverage. This Medicare Part D coverage is optional, but can be valuable if you take medications. If you don’t sign up when you’re first eligible, you might have to pay a late enrollment penalty if you decide to enroll later.
Many people are automatically enrolled in Original Medicare, Part A and Part B, when they reach 65 years of age or have certain disabilities. But Original Medicare doesn’t cover your medications (except those you may receive as a hospital inpatient or, in some cases, outpatient).
You can get Medicare prescription drug coverage in two different ways. Both of these are through private insurance companies that contract with Medicare.
- Through a stand-alone Medicare Part D prescription drug plan—you can add this benefit to your Original Medicare coverage. You can enroll in any Part D prescription drug plan that serves the area where you live.
- Through a Medicare Advantage Prescription Drug plan—you can get a Medicare Advantage (Part C) plan that includes drug coverage, so that you get all your Medicare benefits under one plan.
When can I sign up for Medicare Part D coverage?
You don’t have to purchase Medicare Part D coverage. That decision will not affect the Original Medicare coverage you have, but it may be beneficial for you to enroll in a stand-alone prescription drug plan or a Medicare Advantage Prescription Drug plan when you’re first eligible. If you choose to enroll later or go 63 days or more without drug coverage, you may have to pay a higher premium for prescription drug coverage, unless you can show that you had creditable drug coverage during the time you were not enrolled in Medicare Part D. Creditable drug coverage is
coverage that pays at least as much as Medicare’s standard drug coverage.
You must first have Medicare Part A or Part B to qualify for enrollment in a prescription drug plan and you must have both Medicare Part A and Part B to qualify for enrollment in a Medicare Advantage Prescription Drug plan. The best time to sign up for Medicare prescription drug coverage is usually as soon as you’re enrolled in Original Medicare, during your Initial Enrollment Period (IEP).
You can also sign up for Medicare Part D coverage during the Annual Election Period (sometimes called the “fall open enrollment season”), which runs from October 15 to December 7. During this time period, anyone with Medicare Part A and/or Part B can enroll in a Medicare Part D prescription drug plan or change from one prescription drug plan to another. You can also enroll in or switch Medicare Advantage Prescription Drug plans during this period.
There are some situations that qualify you for a Special Election Period, when you can enroll in a Medicare Part D prescription drug plan or a Medicare Advantage Prescription Drug plan outside of the Annual Election Period.
What’s the coverage gap, and how can I avoid it?
The coverage gap refers to the point when you and your prescription drug plan or Medicare Advantage Prescription Drug plan have spent a certain total amount on your prescriptions; at this point, you’ve reached your initial coverage limit. Now you’re in what’s known as the coverage gap, or “donut hole.” During this phase of your Part D benefits, you pay a higher portion of your prescription drug costs. After you’ve spent a certain amount, you’ll reach the catastrophic coverage phase, and you’ll pay only a small copayment or coinsurance for your medications for the rest of the year.
There are a number of things you can do to help reduce your drug costs. For example: