Enrolling a loved one in Medicare: Part D plans

Toward the end of the first part of our series on enrolling a loved one in Medicare, we mentioned Medicare’s Part D prescription drug coverage option. This is often one of the more confusing pieces of the Medicare puzzle.

Part D, unlike Original Medicare Parts A and B, is an optional program. That said, it’s usually unwise to opt out of it since most Medicare beneficiaries end up needing prescription medications as they get older. However, there are exceptions. For instance, if your loved one has a quality employer-provided prescription drug option, then it may be worth opting out of a Part D drug plan. You should determine whether or not Part D is suitable for your loved one as soon as possible. The program features substantial penalties for late or delayed enrollment.

In most cases, if your loved one doesn’t enroll in a Part D plan as soon as he or she is eligible, but then decides to join later, there will be a penalty. This is a lifetime penalty for every month that enrollment was delayed. For example, if your loved one is eligible for Part D in December of 2016 but chooses not to enroll until March 2017, there will be a four-month penalty fee applied to your loved one’s monthly premium payment. This penalty fee goes for as long as they have the insurance coverage. You should discuss these penalties with your loved one up front. Opting to bypass Part D to save a few dollars in the beginning could lead to enormous penalties if he or she needs prescription drugs later in life.

If you and your loved one do decide to forego Part D coverage during initial enrollment, you should evaluate your loved one’s health situation each year to see if prescription drug coverage has become necessary. Open Enrollment (October 15 through December 7 each year) is the best time to re-evaluate Medicare coverage. This is also the time to adjust plans or add a Part D plan.

Reasons to forgo Medicare Part D

In some cases, your loved one may not need Part D prescription drug coverage. One case we already mentioned was having an employer-provided prescription drug plan. Other cases are having a retiree plan, or a plan from the Veteran’s Administration. The key is that the plan needs to be “creditable coverage,” which means the drug coverage that equals or tops a Part D plan. If their plan is creditable, then you can safely opt them out of Part D. You should obtain a letter certifying your loved one’s creditable coverage. If they ever lose their coverage, you can present the letter to Medicare and obtain a replacement Part D plan without paying late fees and penalties. Another instance where your loved one can safely opt out of Part D is if they have a Medicare Advantage (Part C) plan. Most of these plans offer drug coverage, though you should ensure that the plan’s list of provided drugs meets your loved one’s needs.

Part D plans come in all shapes and sizes, so there’s really no quick and easy way to determine the best plan for your loved one other than researching the plans available in your local area. We can connect you to an insurance representative to with this search, either online here or by calling 1-(855)-MEDIGAP. You may also wish to consult with a State Health Assistance Program (SHIP) counselor. They also provide free Medicare advice and are federally funded. Your local pharmacy may also be a resource, as many have employees who are well-versed in plan comparisons via the official Medicare website.

Finally, you should make a habit of checking your loved one’s drug plan on an annual basis. It’s a good idea to make sure that your loved one’s Part D plan hasn’t changed its formulary (drug list), its prices, or its coverage options and requirements. It is best to check during the October 15th to December 7th open enrollment period. Medicare allows beneficiaries to adjust their plan coverage during this period with no penalty fees.

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