Knowing how to choose a Medicare Part D plan is essential for managing prescription drug costs in retirement and ensuring you have the right coverage.
Access to prescription drugs plays a vital role in maintaining your health during retirement. According to the Commonwealth Fund, prescription drug costs making up about 20% of all medical expenses in retirement. Having the right coverage isn’t just helpful—it’s essential.
Without a solid plan to manage these costs, you could find yourself facing significant gaps in your healthcare coverage during your golden years.
That’s why selecting the right Medicare Part D plan is crucial. You need a plan that fits your budget and provides coverage for the medications you rely on.
In this post, we will explore what Medicare Part D covers, how it works alongside Medicare Advantage and Medigap plans, and how to choose a Medicare part D plan tailored to your unique healthcare needs.
What is Medicare Part D and Why Do You Need It?
Medicare Part D is the prescription drug component of Medicare.
Original Medicare (Parts A and B) don’t include prescription drug coverage.
Most Medicare beneficiaries need some form of prescription drug coverage. However, Original Medicare (Parts A and B) don’t include it at all. Neither do Medigap plans.
If you have a Medicare Advantage (Part C) plan, it may come with its own built-in prescription drug coverage. If it doesn’t, you should consider purchasing a separate, standalone Part D plan.
But how do you choose which one is best for you?
Not all Part D prescription drug plans are alike. Knowing your options will help you make the best decisions for your health and your wallet.
Do You Need a Standalone Plan?
First, decide whether you need a standalone Medicare Part D prescription drug plan (PDP) or drug coverage through a Medicare Advantage Drug Plan (MA-PD).
If you are enrolled in or plan to enroll in Medigap, you need a standalone plan.
You also need a standalone plan if you enroll in the Medi-Share 65+ healthsharing plan. Neither Medigap nor Medi-Share 65+ includes prescription drug coverage on their own.
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How To Compare Medicare Part D Plans
When comparing plans, look beyond the surface details and focus on how to choose a Medicare Part D plan that meets your specific needs and minimizes your costs.
Here are the key factors to consider when choosing a plan:
Pricing
Of course, pricing is important, but you should consider more than just monthly premiums.
It’s important to review the entire cost structure of the plan. This is especially important if you take a lot of prescription drugs.
So on top of premiums, you should also consider:
- copayments
- deductibles
- the plan’s overall star rating
Covered Drugs
You should also carefully inspect each plan’s formulary, or list of covered drugs.
For each drug you take or anticipate taking, check the pricing tier. Tier 1 drugs are inexpensive and typically generic equivalents. Some classes of drugs are automatically covered in all Medicare Part D Plans.
Tier 4 drugs can potentially cost thousands of dollars per month, or even per dose without insurance.
You can expect higher out-of-pocket costs for these drugs than for Tier 1 drugs/generics.
Exclusions
Although Medicare Part D covers a large array of medications, some types of drugs are typically not covered.
For example, drugs not approved by the FDA or drugs used for cosmetic purposes are rarely covered by Medicare.
Pharmacy Network
When it comes to filling your prescriptions, choosing the right pharmacy can make a big difference in how much you pay.
Most pharmacies across the country accept Medicare Part D plans. But it’s always a good idea to double-check that your favorite pharmacy is in-network with your plan. Sticking to an in-network pharmacy usually means lower costs and fewer surprises at checkout.
Some plans even offer preferred pharmacy networks, where you can enjoy even greater discounts on your medications. Taking a few minutes to explore your pharmacy options now can save you money, time, and stress throughout the year!
Financial Assistance for Medicare Part D
For those concerned about the cost of Medicare Part D plans, financial assistance programs are available to help make prescription drug coverage more affordable.
Here are two key options to explore:
Extra Help (Low-Income Subsidy Program)
If you have a limited income, you may qualify for Extra Help, a federal program that assists with Medicare Part D costs.
You can apply for Extra Help through the Social Security Administration or your state’s Medicaid office.
State Assistance Programs
Some states offer State Pharmaceutical Assistance Programs (SPAPs) that can help lower-income Medicare beneficiaries cover their prescription drug costs.
These programs vary by state, so check with your local Medicare office for details.
When Should You Enroll in Medicare Part D?
If you are new to Medicare, the best time to enroll in Medicare Part D is during your Medicare Initial Enrollment Period (IEP).
Your IEP typically begins three months before the month in which you turn 65, and ends at the end of the third month after the month in which you turn 65.
So all told, you’ll have about seven months of open enrollment to decide on and enroll in a plan.
The other best time to enroll in a Part D plan is during AEP, the open enrollment period that runs from October 15th to December 7th.
Beware of Part D Late Enrollment Penalties
If you fail to enroll in Part D during your IEP, and you don’t have other prescription drug coverage in force, you will have to pay late enrollment penalties.
The penalty is calculated based on the number of months you were without coverage. It is added to your premium for as long as you have a Part D plan.
So the longer you wait to enroll in Part D, the bigger the penalty. And the penalty will last the rest of your life, as long as you have a Part D plan.
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Making the Right Choice for Your Medicare Part D Coverage
Choosing the right Medicare Part D plan is a important step in managing your healthcare costs and ensuring access to the prescription medications you need.
Remember to review your plan each year during the Annual Enrollment Period to ensure it still aligns with your coverage goals and preferences.
Don’t navigate this process alone—our Personal Benefits Managers are here to guide you through every detail.
Call us today at 1-800-913-3416 or schedule your free consultation and make an informed choice for your health and future.
Frequently Asked Questions
Can I change my Part D plan if my needs change?
Yes, you can change your plan during the Annual Enrollment Period (AEP), which runs from October 15 to December 7 each year. This is the best time to evaluate your current plan and switch to one that better meets your needs for the coming year.
What is the difference between a standalone Part D plan and a Medicare Advantage Drug Plan?
A standalone Part D plan only covers prescription drugs and is used with Original Medicare or Medigap. A Medicare Advantage Drug Plan (MA-PD) combines medical and drug coverage into one plan, often including extra benefits like dental or vision.
Can I use Part D benefits if I travel outside the U.S.?
Medicare Part D generally does not cover medications purchased outside the U.S. However, in certain emergencies or special situations, coverage may be available.
Can I use a discount card or coupon with my Medicare Part D plan? You may use discount cards or coupons for medications not covered by your Part D plan. However, these cannot be applied to drugs that your plan covers, as Medicare prohibits combining benefits with other drug discount programs for covered medications.
Can I switch Part D plans mid-year if my medications change?
Generally, you can only change plans during the Annual Enrollment Period (AEP). However, if you qualify for a Special Enrollment Period (SEP)—such as moving to a new area, losing other creditable drug coverage, or entering a nursing home—you may be able to switch plans outside of AEP.
For Further Reading:
- How to Avoid this Costly Medicare Mistake
- What Kind of Medicare Plan Is Best for Me? (Quiz)
- What’s New in Medicare for 2024?
- What is the “Maximum Out-of-Pocket” in Medicare Plans?
- Why You Should Use an Independent Agent to Buy Your Medicare Plan | What Are Medicare Excess Charges?
- Medicare Star Ratings and How They Work
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Misty Berryman is one of your Personal Benefits Managers at Medigap Advisors. She loves working for Medigap Advisors for many reasons, including being part of the solution to one of life’s most important healthcare challenges: choosing the right Medicare plan. Read more about Misty on her Bio page.