What Are Medicare Part D Plans? Basics
Medicare offers prescription drug coverage, or Part D, to everyone with Medicare. To get Part D, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and the drugs covered, and plans can change from year to year. A plan that covers your prescriptions this year might change and not cover them next year.
If you are already enrolled in Part D, it pays to review your coverage every year, which you can do during the Open Enrollment Period.
Why do I need Part D Medicare?
We all want to stay in good health, but no one can predict the future. These plans are insurance that covers the cost of prescription drugs. If you take drugs now or if you do not and your health changes or you need more medicines, this insurance will help pay for your drugs and protect you from very high drug costs.
If you choose not to enroll in Part D, you may face a late penalty, depending on your circumstances, and have to pay higher monthly premiums for the rest of the time you have drug coverage from Medicare.
Learn more about Part D penalties you might face if you enroll late.
Many states have low-cost Part D plans that can act as a safety net in case your health situation changes. Consider this if you don’t take prescription drugs now.
Can I simply keep my current drug coverage and not get Medicare Part D?
In some cases, you may be able to keep your current prescription drug plan and not join a Part D plan. This occurs when your current drug plan is considered creditable coverage, meaning it is as good as Medicare Part D.
Creditable coverage information is usually found in the materials provided by the health plan. Keep the document in case you should decide to sign up for Medicare drug coverage in the future.
Below are some examples of prescription drug coverage you may currently have that could count as creditable coverage. Remember, if you do not have creditable coverage and delay your enrollment in Part D, you will have to pay a penalty for the life of your Part D plan coverage.
What if I have a company-sponsored discount card?
Some company-sponsored prescription discount cards may still work, even though the Medicare prescription drug coverage has started.
Remember that discount cards alone are not considered to be creditable coverage. So you still need to sign up for the Medicare prescription drug coverage when you’re eligible to make sure you’re covered and avoid paying a penalty for signing up late.
Check with your company-sponsored discount card provider. Ask if your card will still be good once you’ve signed up for Part D.
What if I have an employer or union plan?
Your employer or union should let you know if your coverage will continue or if they think you should join a Medicare Part D drug plan.
If you have not received any information from your employer or union, call them now and ask whether your prescription drug coverage is creditable.
If your employer’s prescription drug coverage is creditable, you need written proof. Most employers and unions are required to notify Medicare-eligible employees by October 15 every year, whether or not the employer coverage is creditable.
- Your employer may want to see a Creditable Coverage Model Notice from the Centers for Medicare and Medicaid Services. The model notice includes the name of the insured (employee or spouse) and coverage effective dates.
- If your employer coverage is creditable, you can join a Part D drug plan, but usually the employer insurance is all you’ll need.
- If you decide to join Part D, be sure to ask whether (1) your employer plan will coordinate with Part D (which one pays first), and (2) if you will lose your current coverage (Part D replaces some employer coverage).
If your employer’s coverage is not creditable, you should consider signing up for a Medicare Part D drug plan to avoid late enrollment penalties. Talk with your employer or union benefits office before deciding to drop your employer or union coverage.
- Most employer/union insurance plans do not let you drop just the drug coverage. They require you to drop the whole insurance plan, including hospital and medical care coverage.
- If you drop your employer or union coverage, you may not be able to get it back.
- If you drop your employer or union health benefits, you may have to buy insurance to supplement Medicare, called Medicare Supplemental Insurance or Medigap. Another option is to join a Medicare Advantage Part C health plan that takes the place of Medicare Part A and B. These plans may cost you more than your employer or union health plan does. They may also give you fewer benefits.
If you change your part of the insurance plan, your spouse or dependents may not be able to get healthcare and prescription drug benefits.
What if I have Medicaid?
If you are turning 65 and you are eligible for both Medicare and Medicaid, you will be signed up for a prescription drug plan automatically. You do not need to do anything.
However, Medicare will pick a plan for you at random. So you may want to choose a plan on your own so you can be sure to get a plan that meets your needs.
Call or write the plan that was assigned to you and make sure it will cover the prescription drugs you are taking. If not, you can switch to another plan at any time. You will not have to pay a penalty.
What if I have Medicare Part C (Medicare Advantage)?
Many Medicare Advantage plans offer Medicare drug coverage.
If you already have a Medicare Advantage plan and do not have prescription drug coverage included, call the plan to see if you can add it.
What if I have Medigap with current drug coverage?
Even if you have a Medigap plan, you most likely still need to join a Medicare drug plan. Most Medigap plans do not cover any of the cost of prescription drugs.
If you have Plans H, I or J, these plans mostly do not cover your prescription drugs, unless you have had it since 2005 AND have not joined a Medicare drug plan. Medigap plans H, I and J are not considered to be creditable coverage. So if you decide to keep an H, I or J plan with drug coverage, you will pay a penalty if you decide to join a Medicare drug plan later on.
If you have a very old Medigap policy with drug coverage other than H, I or J, you should contact your plan to find out if your Medigap drug coverage is considered to be as good as the Medicare drug coverage.
What Medicare pharmacy can I use?
Your Medicare Part D plan will have identified pharmacies in your area to be part of its network. These are the pharmacies you will have to use to get your drugs.
Medicare has set guidelines so that the network of pharmacies will be convenient for you. These network pharmacies should be within a certain distance from where you live.
You will be able to ask the plan which pharmacies are in their network. You may want to look for a plan that has your favorite pharmacy included in its network.
Sometimes, you may need to get drugs from a drugstore that is not in your network, called an out-of-network pharmacy. Plans must give you “adequate access” to drugs at out-of-network pharmacies when you cannot get your drugs at a network pharmacy. Plans want balance – they want to make sure you can get drugs when you need them but not use out-of-network pharmacies unless you have to.
When can I use out-of-network pharmacies?
Plans must let you use an out-of-network pharmacy when you:
- Are traveling a long way from your network pharmacy and run out of your drugs or lose them
- Get sick and need a drug and cannot get to a network pharmacy
- Are not able to get a drug quickly in your network. For example, there is not a network pharmacy near you that is open 24 hours a day.
- Are filling a prescription for a drug that your network pharmacy does not normally carry, but that you can get by mail
- Get a vaccine in the doctor’s office
- Get the drug while in an emergency department, provider-based clinic, outpatient surgery or other outpatient setting that is not in your network
Plans have some flexibility to set rules so that you use out-of network pharmacies only when you need them. However, Medicare will check to see how often you use an out-of-network pharmacy to be sure the plan is giving you what you need.
How do I pay for drugs I buy at an out-of-network pharmacy?
When you buy a drug at an out-of-network pharmacy, you will have to pay for the drug out of pocket. You will then submit a receipt to your plan and ask them to pay for that drug. You will probably need to explain why you were not able to use a network pharmacy.
You will pay the same price you would have at a network pharmacy—plus the differences between the out-of-network pharmacy’s price and the network pharmacy’s price for that drug.
What if I travel often or live in different parts of the country during the year?
You will want to look for a drug plan with a wider network of pharmacies, such as a regional or national network.
You may also want to look at each plan to see if you can get your drugs by mail.