Who should enroll in Medicare Part D?
Medicare Part D was created to give prescription drug coverage to Medicare beneficiaries who do not already have drug coverage that is as good as or better than the Part D plan. Your first step in deciding whether to enroll is to figure out what, if any drug coverage you have now. Do you have prescription drug coverage from an employer or union? Do you have drug coverage through the Veterans’ Administration or the military? Do you get your drugs through your state Medicaid program?
Employer and union drug coverage
If you or your spouse has health benefits from a former employer or union that covers prescription drugs, you should get a letter from that insurer that tells you if your coverage is better than Medicare Part D.
If your current coverage is as good as or better than the Part D coverage, you can and should keep those benefits. You don’t need to enroll in a Medicare Part D plan. If your employer or union benefits are reduced or stopped sometime in the future, you can then enroll in a Medicare Part D plan without any penalty for late enrollment. Be sure to keep the letter about your former plan as proof that you had “as good or better” coverage.
If your employer or union plan does not offer drug benefits that are at least as good as the Medicare drug benefits, then you might want to enroll in a Medicare Part D plan. If you choose not to enroll right now, but change your mind later, you may face a late enrollment penalty. The penalty is equal to 1% of the “national base beneficiary premium” ($32.42 in 2014) for each month you delay enrollment. And it’s not a one-time penalty. You will pay the penalty each month along with your premium for as long as you have a Medicare prescription drug plan.
Carefully read all the information you get from a former employer or union about your existing drug and health coverage before you decide to join a Part D plan. In some cases you may not be able to drop just the drug coverage from your retiree coverage. You may have to drop all coverage, including health benefits, which could mean that you may not be able to get them back.
Some people enroll in a Part D plan and also have some drug coverage from an employer or union plan that is not as good as the Medicare benefit. This is OK, but payments from the private plan for drugs will not count toward out-of-pocket expenses to meet a plan deductible or reach the out-of-pocket spending limit.
If you are unsure whether to keep your employer or union drug benefits or join a Medicare Part D plan, you should get more information. Your former employer or the union sponsor of your retirement plan should be able to help you. Also, each state has a health insurance counseling organization that gives free help. (Contact information can be found under State Health Insurance Assistance Programs in Where can I get more help? )
TRICARE, Veteran’s Administration, and Federal Employees Health Benefits Program drug coverage
If your current drug coverage is through any of the groups listed here, the drug benefits are as good as or better than Medicare Part D coverage:
- TRICARE (military dependent or retiree health care)
- The Veteran’s Administration (VA)
- Federal Employees Health Benefits Program (FEHB), administered by the US Office of Personnel Management (OPM)
This means it will almost always be best to keep your current coverage. But, in some cases, adding Medicare Part D can give you extra coverage. Sometimes it can also lower your co-pays. Get more information from your benefits administrator or your insurer before making any changes. If you lose your TRICARE, VA, or FEHBP coverage and your Medicare drug coverage begins within 63 days of the loss, in most cases, you won’t have to pay a penalty.
If you have full Medicaid benefits and qualify for Medicare, you are already enrolled in a Medicare Part D drug plan. (Not all Medicaid beneficiaries are eligible for Medicare.) Medicare, not Medicaid, covers most prescription drugs.
If you did not choose a Part D drug plan, Medicare chose one for you. This means you may not be in the plan that has the best formulary for you. (We go over this in detail in Formularies and Drug Coverage.)
If you have Medicaid and find that you would do better in another Part D plan, you can switch to another plan at any time. You do not have to wait for open enrollment.
A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in your Medicare coverage. These policies help pay some of the health care costs that Medicare doesn’t cover.
If you have a Medigap Plan that covers drugs, you have 2 options. You can keep your Medigap plan with the drug coverage or you can enroll in Medicare Part D – but you cannot have both.
- Medicare Part D prescription drug coverage
- Special things people with cancer need to think about
- Who should enroll in Medicare Part D?
- Making a Part D plan decision
- Getting help to pay Medicare Part A and/or Part B premiums (the Medicare Savings Programs)
- Formularies and drug coverage
- Where can I use my Part D drug coverage to fill my prescriptions?
- How much will the Part D drug plan cost?
- Things to know once you’ve chosen a Part D drug plan
- Switching drug plans in the future
- Frequently asked questions
- Where can I get more help?
- Are you ready to get started?