Medicare Annual Enrollment Checklist

Our Medicare Annual Enrollment Checklist helps you choose the best Medicare plan to meet your unique needs and budget. The Annual Enrollment Period (AEP) occurs every year between October 15 and December 7.

1. Create a List of Current Providers ….

Your list should include all healthcare providers you currently use: Doctors (both primary care physician and specialists), hospitals, clinics, labs, nursing homes, pharmacies, medical equipment suppliers, and anyone else you rely on for medical treatment.​

2. Create a List of Current Prescription Medications You Take Daily….

List all prescription medications you take, including dosage.

3. List Any Expected Changes….

Make a note of any procedures your doctor recommends for the coming year. Other changes may be a chronic condition worsening (or improving), losing or gaining secondary coverage, and whether you plan to move.

4. Review the Annual Notice of Change….

Medicare requires all plan providers to send beneficiaries an Annual Notice of Change (ANOC). If you have a Medicare Advantage (MA) or Part D plan, you should receive this document before AEP begins. The ANOC lists plan changes for the coming year, including costs, network, service area, and coverage. It is one of the most important healthcare documents you’ll receive every year. Plans nearly always have changes from year to year. Costs, provider networks, service areas, and drug formularies are the most likely areas for changes.

5. Review the Evidence of Coverage…ANOC

At the same time that you receive the Annual Notice of Change..ANOC, you should also receive the EOC: Evidence of Coverage. This document offers greater detail regarding plan changes scheduled for the coming year.

6. Review Your Current Coverage With an Agent

Comparing the ANOC and the EOC to the provider and prescription lists you created earlier lets you know whether your current coverage will still meet your needs next year. These documents represent the only communication you’ll receive about plan changes, so do not ignore them.

Questions to ask about your plan include:

Refer to the lists you created in the first three steps to answer these questions.

7. Does Your Current Coverage Fit Your Budget? Do You Need to Make a Plan Change?

You can expect costs to change every year – and not always for the worse. Many MA plans see cost reductions from year to year. At the same time, your budget requirements may have changed. Consider the full cost of the plan, not just the monthly premium. Deductibles, co-pays, and co-insurance all play a role in total plan cost. In addition, look at your plan’s maximum out-of-pocket spending for the year.

8. Are You Still Happy and Satisfied with Your Plan?

Your plan may look good on paper but not so great in practice. Consider the following to rate your Medicare plan satisfaction:

The real question, though, may be this: Would you recommend your plan to a friend? If the answer is “No,” it may be time to look at other options.

9. Compare Plans with a Medicare Certified Agent…

Even if your current plan meets your needs, it’s always a good idea to compare your plan options. That’s because ALL plans change every year, not just yours.

10. Talk to a Licensed and Certified Medicare Agent who has to be re-certified each year.

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Medicare and Medicaid

The Difference Between Medicare and Medicaid

With such similar sounding names, it can be easy to confuse Medicare and Medicaid. Add in the fact that both are government-run programs designed to help beneficiaries pay for healthcare costs, and it’s no wonder many people confuse the two. In reality, each program has vastly different requirements and benefits. However, it is possible to qualify for both. This post provides a basic overview of each program, key differences between them, and how you might qualify for both Medicare and Medicaid.

Medicare at a Glance

Medicare is a federal entitlement program designed to provide medical coverage to Americans aged 65 and over. The program also covers all those with End-Stage Renal Disease and many individuals with disabilities.

What Is Medicaid?

Medicaid is a similar entitlement program meant to address the needs of a different population: the impoverished, children, pregnant women, and those with disabilities. Medicaid is a state-federal cooperative effort to provide basic medical assistance to individuals who cannot afford private health insurance on the individual market or through their employer.

Medicaid works much like having private health insurance: enrollees are given a card to present at the doctor’s office. If the doctor participates in Medicaid, the state will pay for the appointment, minus the contribution of any other health insurance the individual carries. There are different eligibility requirements in each state, but all states have income limits that recipients must meet.

Medicaid FAQ: Frequently Asked Questions About Medicare & Medicaid

What Is Medicaid?

Medicaid is a state level health insurance program funded by both federal and state taxes. No state pays more than 50 percent toward Medicaid costs. The Department of Health and Human Services (HHS) lists the percentage of federal funding for each state .

Each state sets its own eligibility requirements to qualify for Medicaid. While age sometimes plays a role, the main qualifier is that your income must be below certain thresholds.

What Is Medicare?

Medicare is a health insurance program funded and managed at the federal level. If you are age 65 or older and have been a legal U.S. resident for at least 5 years, you qualify for Medicare.

The program is also available to citizens before they turn 65 if they meet certain conditions. These include:

How Is Medicaid Different from Medicare?

The main difference is how you qualify for each program. While age may play a role in Medicaid (some states limit Medicaid enrollment to children and seniors), it mostly comes down to household income. Medicare, on the other hand, is available to everyone aged 65 and over, regardless of income. In addition, some people qualify for Medicare before turning 65 if they meet certain medical requirements.

Next is the fact that Medicaid is a state-run program while Medicare is managed at the federal level. That means that Medicaid requirements can – and do – vary according to where you live.

Finally, we have out-of-pocket costs. Most Medicaid beneficiaries have few out-of-pocket costs, with some paying zero. Medicare is different. It uses a cost sharing model that includes monthly premiums, co-insurance, and annual deductibles. Although some Medicare enrollees also qualify for free or reduced costs. Typically, these are the beneficiaries who qualify for dual enrollment (see below).

How Are Medicaid and Medicare the Same?

Medicaid and Medicare are both government-run health insurance programs that require enrollees to meet certain requirements.

How Do I Qualify for Medicaid?

Each state has its own Medicaid requirements. To determine whether you qualify for Medicaid in your state, please call you state Medicaid office.

Can Medicaid Help Pay for My Medicare?

Yes, there are additional benefits under the Medicaid umbrella that help cover Medicare costs. If you are dual eligible, i.e. qualify for both Medicaid and Medicare, you may take advantage of these programs if you meet income and resource limits.

What Does Dual Eligible Mean?

Dual eligible means you qualify for both Medicaid and Medicare.

Can I Enroll in Both Medicaid and Medicare?

Yes, if you meet requirements for both programs (dual eligible), you may enroll in both Medicaid and Medicare.

What Is a Dual Special Needs Plan?

These Medicare plans are available only to people considered dual eligible for both Medicaid and Medicare. In addition to the benefits provided by Original Medicare, dual plans offer prescription drug coverage. Most plans also cover other services, such as routine vision and dental care. Like Medicare Advantage plans, they are offered by private insurance companies.

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How Do I Qualify for a Dual Special Needs Plan?

You must meet the following requirements for a dual plan:

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Preventative Care

Your Preventive Care and Medicare

Like most health insurance, Medicare covers a variety of preventive care services. The reason? Preventive care is less expensive than treatment. Luckily, what’s good for Medicare’s bottom line is also good for your health.

Welcome to the Medicare Preventive Visit and Yearly Wellness Exam

Once you sign up for Medicare Part B, you are eligible for the Welcome to Medicare preventive visit. Assuming your provider accepts assignment, your out-of-pocket cost for this service is zero. This screening gives your doctor a baseline reading of your current health. Your provider measures a variety of vitals, including height, weight, and blood pressure. They also take a complete medical history and discuss behavioral health issues. The screening also includes a basic vision test and a body mass index calculation.

Your doctor should also offer flu and pneumococcal shots if appropriate and explain advance directives. The visit should end with a written plan that lists other preventive screenings your doctor recommends.

After your first 12 months, Part B covers a Yearly Wellness Exam. This is essentially the same visit and, again, your out-of-pocket cost is zero. Medicare covers this visit every 12 months.

Your Cancer Screenings Covered by Medicare

Medicare Part B covers numerous cancer screenings, including:

Patients may need to meet certain criteria regarding age and health status. For example, to qualify for the lung cancer screening, you must be aged 50 to 77 and have smoked an average of one pack per day for 30 years. Out-of-pocket costs vary, from zero to the standard co-insurance amount of 20 percent. Frequency of the screening varies as well.

Your Screenings for Chronic Conditions

Chronic conditions are much easier to treat if you catch them early. In fact, you may be able to avoid them altogether.

Medicare Part B covers the following screenings for beneficiaries who qualify. These include:

Preventive Shots Covered by Medicare Part B

In addition to preventive screenings, Part B covers certain immunizations. These include:

Medicare Lifestyle Screenings and Counseling

Medicare Part B covers many services designed to support healthy lifestyle changes. These include:

Guidelines vary but are mostly based on age and medical history. Talk to your doctor to get started.

The short answer is yes, you may apply for Medicare by calling Social Security’s 800 number. The longer answer is yes, but Social Security is warning people to expect long hold times. They predict the 800 number will be overwhelmed with people calling with questions about their benefits, disability applications, etc. SSA is prioritizing “critical claims” calls. This includes Medicare applications for healthcare coverage.

Medicare Deductible

Your Medicare Deductible  

Like most insurance, Medicare beneficiaries have a variety of out-of pocket costs. One of these is the Medicare deductible. Every benefit  period, you must meet the deductible before Medicare begins paying its  share of covered costs. 

Medicare Part A Deductible 

The Medicare Part “A” deductible is for each initial benefit period for the  1st 60 days . The benefit period begins as soon as you are admitted to the  hospital or skilled nursing facility as an inpatient. It ends when you go 60  days without receiving covered care as an inpatient. Re-admittance to the  hospital at any point during that 60-day period – including on day 60 – is  considered part of the same benefit period. 

You owe the Part A deductible for each benefit period. You may have  multiple Part A benefit periods during a calendar year. 

Medicare Part B Deductible 

The Medicare Part “B” benefit period is one calendar year. You must pay  the Part B deductible every year. The Medicare Part B deductible usually  changes each year and once you pay this amount, Medicare begins paying  its share of costs for covered services. 

Medicare Advantage and Part D Deductibles 

If you have a Medicare Advantage Plan (MA) or Part D plan, you may have  additional deductibles. Details for these are determined by the private  insurance company that provides your plan. Contact your provider to  learn more about the deductible and benefit period under your MA only  plan.

Medicare Part “A” Co-Insurance 

Under Original Medicare, your share of covered expenses is called co insurance. 

Medicare Part A co-insurance varies according to the number of days you  spend as an inpatient. Each benefit period begins a new co-insurance calculation. 

• Days 1-60: you pay an initial deductible per hospital stay • Days 61-90: co-insurance expense per day 

• Days 91 through 150 lifetime reserve days: co-insurance per day 

You get a total of 60 lifetime reserve days throughout the time you have  Medicare. If you use all 60 of your lifetime reserve days, you pay 100  percent of inpatient care costs thereafter. However, if you have a Medigap plan, you get an addition 365 lifetime reserve days. 

Most Medicare Part B services have a Medicare-approved cost. Assuming you receive care from a provider who accepts assignment, Medicare typically pays 80 percent of this amount. The remaining 20 percent is your  coinsurance amount. 

Medicare Advantage Co-Pays 

Medicare Advantage and Part D beneficiaries typically pay a fixed dollar amount for services, otherwise known as co-pays. Some plans charge both co-pays and co-insurance, but these are rare. Common co-pays for a  Medicare Advantage plan maybe $15 for primary care visits and $30 to see a specialist within your network. 

Most Part D plans have tiered pricing as a means to control costs. Co-pays rise along with the tiers. For example, your co-pay for prescriptions on the lowest tier may be only $1 to $3. Co-pays on the next tier may range from  $5 to $12, then $15 to $30, and so on. 

Medicare Advantage Part D Out-of-Pocket Limits

Medicare Part D and Medicare Advantage plans all have maximum out-of-pocket limits. This means that, once you meet this threshold, you have no further out-of-pocket costs for the rest of the year. There is no out-of-pocket maximum for Original Medicare. If you have multiple or lengthy hospital stays, your costs could be substantial.

There is no out-of-pocket maximum for Original Medicare. If you have multiple or lengthy hospital stays, your costs could be substantial.

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Late Enrollment Penalties

Late Enrollment Penalties (Medicare Part B and Part D)

Nobody wants to spend more than they have to on their healthcare coverage (or anything else, for that matter). So, if you’re eligible for Medicare, make sure you’re enrolled in Part B (medical insurance) and Part D (prescription drug coverage). If you wait too long, you’ll end up paying more than you should.

Why There’s a Penalty for Late Enrollment….
It takes a lot of money and resources to run Medicare. But making sure that Medicare is available to everyone who needs it — today and in the future—is something from which many may benefit. That’s why enrolling in Parts B & D as soon as we’re eligible is so important.

The reason is simple — if everyone waited until they were sick to enroll in Part B or Part D, Medicare would never be able to sustain itself. The cost of paying for care for individuals who are ill and/or require expensive medications would far outstrip the amount of money taken in by Medicare in the form of premiums and taxes. That’s why Medicare needs everyone to begin paying their premiums for Parts B and D as soon as they’re eligible so there’s enough money to care for everyone when they need it.

Understanding Enrollment in Medicare Part B…

If you began receiving Social Security or Railroad Retirement benefits at least four months before turning 65, you’re automatically enrolled in Medicare Parts A and B.

There are instances, however, when you may not be enrolled in Part B. This may be because you, or your spouse, have other health insurance through an employer. Or maybe you had Part B at one time, and then dropped it when you got other insurance.

Whatever the case, if you have no other insurance and you’re eligible for Part B, you must enroll to avoid a penalty.

How Much Is the Late Enrollment Penalty for Part B?
For every 12-month period you don’t enroll in Part B when you’re eligible, you’ll pay an extra 10% of your monthly premium. If you didn’t enroll for two years, for example, you’d pay a penalty of 20% per month. Worst of all, you’ll continue to pay that penalty for as long as you have Medicare.

Understanding Enrollment in Medicare Part D

Part D, Medicare Prescription Drug Coverage, is different from Part B in two important ways. First and foremost, enrollment in a Medicare Prescription Drug Plan (PDP) is never automatic. Secondly, the only way you can get a Medicare Prescription Drug plan is through a private insurance carrier.

Unlike Part B, premiums for Medicare Prescription Drug Plans vary between different insurance carriers. One company may even have several different drug plans, all with different premiums and coverage levels. When you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be. You may have to pay this penalty for as long as you have a Medicare drug plan.

If you had to pay a Part D late enrollment penalty before you turned 65, the penalty will be waived once you reach 65.

How Much Is the Late Enrollment Penalty for Part D?
Calculating the late enrollment penalty for Part D is a bit more complicated, mostly because Part D premiums aren’t standard. In addition, you can be penalized anytime you go a period of 63 days or more without a Medicare prescription drug plan or some other creditable coverage (from a former employer, for example).

The penalty itself is calculated by multiplying 1% of the national base beneficiary premium by the number of full months you were eligible for coverage, but didn’t enroll. The final amount will be added to your monthly premium.

When To Enroll In Medicare

Your Medicare Enrollment Is not Automatic

Many people are surprised to learn that they are not automatically enrolled in Medicare Parts A and B. This is particularly true now that the retirement age (as per Social Security) is either 66 or 67. Previously, if you received Social Security benefits at age 65, you received your Medicare card around three months before your 65th birthday.

You need to sign up for Medicare if you:

You can apply for Medicare online. Assuming the information you enter matches Medicare’s records, you do not need to submit documentation, such as a birth certificate. However, if there are any discrepancies in your records or you were not born in the United States, you may need to apply in person or over the phone via the Social Security office.

Please note that, if you do need to apply for Medicare through Social Security, you typically need to schedule an appointment, which may take months. If you expect there are any discrepancies in your records, call your local Social Security office to make an appointment as soon as possible.

Your Medicare Enrollment Periods

Please make note of Medicare’s different enrollment periods. These allow you to complete your initial enrollment or make changes to your existing coverage.

Your Initial Enrollment Period (IEP)
Your Initial Enrollment Period begins three months before your birthday month and ends three months after your birth month, for a total of 7 months.

Medicare Advantage Part C Enrollment Period
This is for beneficiaries who miss their IEP. It runs from January 1 through March 31 with coverage beginning July 1 of the year you enroll.

Your Special Enrollment Period (SEP)
You are eligible for a Special Enrollment Period if you wait to enroll in Medicare Part B because you currently have coverage through either their or their spouse’s employer. If you lose coverage, you have eight months to enroll in Part B without receiving a penalty. This enrollment designation may apply to other events in your life also.

Medicare Advantage (MA) and Prescription Drug Plan (Part D) Annual Enrollment Period (AEP)
Also known as the Annual Enrollment Period, this runs from October 15 to December 7 and allows you to either switch MA plans or switch back to Original Medicare with a Part D plan.

Selecting A Medicare Plan

Consider the following when determining which Medicare coverage is right for you:

Medicare Parts A & B + Medicare Supplement Plan…. Your Choices and Options….

What you can expect:

It may be a fit if:

Enrolling into a Prescription Drug Plan is recommended because Medicare Supplement plans do not provide coverage for these costs.

Medicare Advantage Part “C” choices

What you can expect:

It may be a fit if:

Choosing the Right Medicare Advantage Plan…. It’s all about the provider network

Think about what’s important to you. Every individual may have unique needs and concerns when it comes to healthcare coverage. Some people are most concerned about keeping their costs down. Other people prefer going to any doctor they choose.

Medicare Plan differences to consider:

To help you make a more informed decision, consider the following:

Comparing Medicare Plans

As an enrollee in the Medicare system, it is important to consider your choices and options for health care. Although there are many people who fall under the coverage of Medicare, individual coverage can differ greatly due to the numerous options for coverage and benefits. It’s important to compare your medicare plan options to ensure you get the coverage that fits your needs and budget.

Medicare Part A Hospital Insurance

One option you have when you enroll in Medicare is Medicare Part A coverage. Medicare Part A is sometimes referred to as “Hospital Insurance.” Generally, Medicare Part A covers inpatient hospital care, hospice, home health services, skilled nursing facility care and nursing home care (except custodial care). Some people automatically get Medicare Part A and those who don’t sometimes choose this option when they are still working and receiving health care benefits from their employer. You most likely will not have to pay a monthly premium for Medicare Part A if you or your spouse paid Medicare taxes while working. However, many people receive premium-free Part A. In many cases, if you choose Part A, you must also have Medicare Part B and pay monthly premiums for both.
 

Medicare Part B Medical and Outpatient Treatment Options 

Medicare Part B is sometimes called “Medical Insurance” and covers  medically necessary and preventive services. Things considered medically  necessary to treat a disease or condition, like doctor visits, lab tests, and  surgeries, fall under Medicare Part B coverage. It also covers supplies,  such as walkers and wheelchairs. Some services might be covered only in  certain situations. Medicare Part B does have a premium each month that  you will have to pay. In some instances, your Medicare Part B premium  may be deducted from your Social Security benefit payment. The standard  Part B premium amount varies depending on your income level.

Medicare Advantage Part C

Medicare Part C plans are sometimes called “Medicare Advantage Plans.” If you select a Medicare Advantage Plan, you will get your Medicare Part A and Medicare Part B coverage from the Medicare Advantage Plan. All Medicare services are covered by Medicare Part C, and may even offer extra coverage. Each plan could have different rules and different out-of-pocket costs. Usually you can also get prescription drug coverage through this plan.
 

Medicare Prescription Drug Plan Part D

Medicare Part D is prescription drug coverage. Medicare offers prescription drug coverage to everyone with Medicare. If you choose to not sign up when you’re first eligible you may have to pay a late penalty. In order to receive this coverage you must join a plan run by an insurance company or a private company approved by Medicare. Each plan varies in the cost and options of prescription drugs covered. Prescription drug coverage is available through Part D or through Medicare Advantage Part C.
 

Medicare Supplement / Medigap Plans… Choices and Options

Medicare supplement plans are sometimes called “Medigap Policies.” These plans can help pay for health care costs like co-payments, coinsurance and deductibles, which Medicare Parts A and B don’t cover. If the cost of your medical treatment is exceptionally high, a Medicare supplement plan could be very beneficial to you. Medicare supplement plans don’t cover everything though, so it’s important to research what will be covered to help you make a more informed decision.

What is Medigap? What is a Medicare Supplement?

Medigap is Medicare supplement insurance, which can help pay for health care costs that Medicare Parts A and B don’t cover. You will usually have to have Medicare Part A and Part B to buy a Medigap policy. Medigap policies cannot be obtained with Medicare Advantage. Medigap insurance is provided by private health insurance companies such as Blue Cross and Blue Shield, HealthNet, and Humana. A Medicare supplement policy must follow Federal and state laws.

What are the Medicare eligibility and enrollment requirements?

Medicare applicants who are eligible for a Medigap policy must also enroll in Medicare Part A and Part B to receive the benefits of a Medicare supplement health insurance plan. Medigap policies contain an additional monthly premium on top of Medicare Part B.

Medicare Supplement

Medicare Supplement / Medigap Plans… Choices and Options

Medicare supplement plans are sometimes called “Medigap Policies.” These plans can help pay for health care costs like co-payments, coinsurance and deductibles, which Medicare Parts A and B don’t cover. If the cost of your medical treatment is exceptionally high, a Medicare supplement plan could be very beneficial to you. Medicare supplement plans don’t cover everything though, so it’s important to research what will be covered to help you make a more informed decision.

What is Medigap? What is a Medicare Supplement?

Medigap is Medicare supplement insurance, which can help pay for health care costs that Medicare Parts A and B don’t cover. You will usually have to have Medicare Part A and Part B to buy a Medigap policy. Medigap policies cannot be obtained with Medicare Advantage. Medicare Supplements or  Medigap insurance is provided by private health insurance companies. A  Medicare supplement policy must follow Federal and state laws.

What are the Medicare eligibility and enrollment requirements?

Medicare applicants who are eligible for a Medigap policy must also enroll in Medicare Part A and Part B to receive the benefits of a Medicare supplement health insurance plan. Medigap policies contain an additional monthly premium on top of Medicare Part B.

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Medicare Part D

Medicare Part D Prescription Drugs Coverage)

Medicare Part D prescription drug coverage helps beneficiaries pay for covered prescription drugs bought at certain centers, including retail locations and pharmacies. This benefit could help reduce prescription drug costs significantly.

Where to Get A Medicare Part D Prescription Drug Plan

Prescription drug coverage is available to every Medicare beneficiary. But, if you don’t choose a Medicare Part D plan when you are eligible, and you don’t join a Medicare Part C plan (Medicare Advantage) that includes prescription drug coverage, you could pay a late enrollment penalty if you try to join later. Exceptions exist if you have creditable prescription drug coverage or if you receive Extra Help.

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Medicare Advantage Part D Prescription Drug Coverage

Medicare Part D adds prescription drug coverage to your Medicare Parts A and B, some Medicare Cost Plans, some Medicare Private Fee-for-Service Plans, and Medicare Medical Savings Account Plans. They are offered by insurance companies and other Medicare-approved private insurers. The cost of each plan depends on the provider and your location. The Medicare Advantage and Prescription Drug Plan Annual Enrollment Period (AEP) takes place from October 15 to December 7 each year. During this period, you can get a prescription drug plan or a Medicare Part C plan.
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If you are about to turn 65 or otherwise become eligible for Medicare outside of the AEP, you have seven months to enroll in the following year’s plan in order to avoid a Late Enrollment Penalty.

*Those seven months consist of:

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Coverage begins on the first day of your birthday month if you enroll during the three months before your birthday. If you join during or after your birthday month, your coverage begins on the first day of the month after you enroll.

Here is an example:

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Here are the important dates for enrolling in a Medicare Part D Prescription Drug Plan in a given year:

When you join, you’ll give your Medicare number and the dates when your Part A and Part B coverage started. This information is on your Medicare Card.

Part D Prescription Drug Plan Late Enrollment Penalty

If you go 63 consecutive days, or more, without prescription drug coverage after your Initial Enrollment Period ends, and don’t have a Medicare Prescription Drug Plan, a Medicare Advantage Plan (that offers prescription drug coverage), another Medicare health plan that offers prescription drug coverage, or creditable prescription drug coverage, you may face a penalty should you choose to enroll later. The penalty depends on the length of time you went without the coverage.

At present, Medicare multiplies 1% of a “national base beneficiary premium figure” ($32.74 in 2020) by the number of months you went without coverage. This penalty is rounded to the nearest $0.10 and added to your monthly Part D premium.

For example, if your Initial Enrollment Period ended on February 22, 2017, but you didn’t join a plan until October 14, 2018 (which may mean your effective coverage began on November 1), you would be 19 months late. This would lead to the following penalty (based on 2020 figures):

As a result, you would have to pay an extra $6.20 each month on top of your Part D premium.

Cost of Coverage for Medicare Part D Prescription Plans Vary

Most Medicare Part D plans charge a monthly fee, or premium, that varies according to the plan you choose. The charges can be complex, and you’re likely to pay different prices for prescription drugs depending on their “tier” (more on that later). You may have your monthly premium deducted from your monthly Social Security payment. To do this, contact your prescription drug plan.

Another cost is your annual deductible. The annual deductible is the amount you pay for your prescriptions before Medicare Part D coverage starts to pay its share of your covered prescription drugs.

Medicare Part D Prescription Drug Plans Co-pay/Co-insurance

This is what you pay for each prescription after the deductible, when applicable. A co-payment is the set amount you pay for all prescription drugs in a specific tier. Different tiers correspond to different types of prescription drugs, and how much your insurance will cover each type. For example, you may pay less for a generic prescription drug than for a brand one.

Co-insurance works similarly, but instead of paying a fixed fee, you’ll pay a percentage of the prescription drug’s cost. For instance, you may pay 25 percent co-insurance on a $100 prescription drug; this means you would pay $25 towards the cost while your plan covers the rest.

Medicare Part D Prescription Drug Coverage Gap/ Donut Hole

Sometimes nicknamed the “donut hole,” the Medicare coverage gap represents a temporary limit on what your plan will cover for prescription drugs. In order to reach the coverage gap, you and your prescription drug plan need to spend a certain amount on covered prescription drugs in a  calendar year. This dollar amount changes from year to year.  Once you’re in the coverage gap, you will only pay 25 percent of the plan’s cost for covered brand-name and generic prescription drugs.

Once you’re in the coverage gap, you will only pay 25 percent of the plan’s cost for covered brand-name and generic prescription drugs.

Medicare Part D Prescription Drug Plan Catastrophic Coverage

The out-of-pocket spending threshold for policyholders is the maximum amount you will spend each year. After you reach this figure, you’re out of the coverage gap and automatically receive catastrophic coverage. This 

reduces the amount you have to pay out-of-pocket for covered prescription drugs. 

Again, it is important to remember that this coverage only begins after the policyholder has spent the above amount on covered drugs.  

Prescription Drugs Covered by a Medicare Part D Drug Plan

Each individual Medicare Part D plan has its own covered prescription drug list, also known as a Prescription Drug Formulary. It is common for these plans to classify prescription drugs by tiers, which also means they have a different cost. Prescription drugs in lower tiers generally cost less than prescription drugs found in higher tiers.

Your plan may alter its formulary during the year, but only with Medicare approval. If these changes include a prescription drug you are taking, your plan has two options. One, it either must provide you with written notice at least 60 days before the change takes place. Alternatively, it can give you a 60-day supply when you request a refill as well as provide written notice of the change. See below for an example of levels of tiers and the general cost associated with them. Please keep in mind, each plans’ tiers may structure differently. Check with your plan to learn more about its specific tier structure.

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Medicare prescription drug plans may create their own formularies and don’t have to cover every Part D prescription drug. However, they may not create a “discriminatory” formulary that excludes specific prescription drugs in order to discourage certain beneficiaries from enrolling. If your plan won’t cover a prescription drug that you need, you can ask for a written explanation from your Medicare prescription drug plan. You can also ask for an exception to the formulary…drug list. Formularies or the drug list generally must include at least two prescription drugs in each category, and cover almost all of the prescription drugs in these protected classes of prescription drugs:

Medicare Part D must cover all commercially available vaccines, when medically necessary to prevent illness, except for vaccines covered under Medicare Part B.

What you need to know about Medicare Prescription Drug Part D

Medicare Part D offers prescription drug coverage to anyone who is enrolled in Medicare. You can opt out of receiving this benefit, however if you choose not to sign up when you’re first eligible you will most likely pay a late enrollment penalty.

A few things about Medicare Part D Prescription Drug Coverage:

When to Enroll in a Medicare Part D Prescription Drug Plan

You may owe a late enrollment penalty if you go without a Medicare Prescription Drug Plan for any continuous period of 63 days or more after the Initial Enrollment Period is over. You will not have to pay the late enrollment penalty if you have other creditable prescription drug coverage or you get “Extra Help.”

The penalty itself is calculated by multiplying 1% of the national base beneficiary premium by the number of full months you were eligible for coverage but didn’t enroll. Learn more about the Part D late enrollment penalty.

Two Ways to Get Coverage Part “D” Prescription Drug Coverage

While Part D prescription drug coverage is only available through private health insurers, there are two ways you can receive your coverage:

If you have Medicare Parts A and B and don’t want to switch to a Medicare Advantage plan, then you’ll need to enroll in a stand-alone plan to avoid a late enrollment penalty (unless you have creditable coverage or are receiving extra help). While many Medicare Advantage plans offer prescription drug coverage as part of the plan, there are some that don’t.

Things to Consider when Choosing your Prescription Drug Plan

While price is always important, it’s not the only thing to consider when shopping for a prescription drug plan. You’ll want to keep these other factors in mind when making a decision:

Medicare Prescription Drug List /Formulary Drug List
Each Medicare Prescription Drug Plan has its own formulary, which is a list of the covered prescription drugs that the plan covers. If one or more of the prescription medications you take is not on a plan’s formulary, you may want to look elsewhere or talk to your doctor about alternative medications.

Medicare Part D Plans and Network of Pharmacies
Most plans have a network of pharmacies they want you to use in order to get better prices. If you go to a pharmacy that’s not in your plan’s network, you may have to pay more for your prescriptions.

Medicare Part D Mail Order Choices and Options
Some prescription drug plans can offer you a lower price if you get your medicine through a mail-order pharmacy. The plan may also require that you get a three-month supply at one time. In most cases, this isn’t a problem, but you may want to check with your doctor to make sure mail order is right for your medicines.

A Word about the Medicare Part D Coverage Gap / Donut Hole

During your Medicare Prescription Drug Plan research, you’ve probably heard about the donut hole or coverage gap. The donut hole is a gap in coverage that occurs once you and your plan have met a pre-set spending limit for prescription drugs. When that limit is reached…technically you’re in the coverage gap and must pay for the cost of your prescription drugs.  Once you’re in the coverage gap, you pay 25 percent of the cost for both brand-name and generic prescription drugs. 

You remain in the donut hole until your out-of-pocket costs reach the set limit for that year. Once that happens, you enter catastrophic coverage and leave the coverage gap. From there, you pay only a small co-pay or co-insurance for the rest of the year. Keep in mind that you may never reach the donut hole. Most people don’t.  What’s more, there are discounts available on both brand and generic prescription drugs for those who do reach the donut hole.

Keep in mind that you may never reach the donut hole. Most people don’t.  What’s more, there are discounts available on both brand and generic prescription drugs for those who do reach the donut hole.

When You’re Ready to Enroll in the Plan of Your Choice

If you’re eligible for Medicare Part D and ready to enroll, there are plenty of resources available to help you. You can also find out if you qualify for extra help when paying for your prescription drugs. Ready to get started?