Medicare prescription drug coverage, also known as Part D,  is an optional benefit offered to everyone who has Medicare.  Part D can be purchased as a Stand-Alone Prescription Drug Plan (PDP) by those with both Part A and Part B. Part D can also be purchased as a combined benefit, as part of a Medicare Advantage Prescription Drug Plan (MAPD).  Optional or not, Part D should be treated as an essential component of a comprehensive health package

All Part D plans are purchased through private insurers and will address drug formularies, tier levels, and out of pocket costs differently. It is important to understand these elements, even if purchasing a combined MAPD plan.

Important considerations when selecting a PDP:

  • Coverage of current medications (Tier placement)
  • Monthly cost of medications on the plan
  • Monthly cost of medications not covered on the plan
  • Generic drug costs vs Branded drug costs
  • Out of Pocket costs: Premiums, Copays, Deductibles (can vary by Tier)
  • Extra coverage for high-cost medications?
  • Pharmacy choice, especially with multiple residences
  • Multi-state coverage, especially if a frequent traveler
  • Mail order option- 30, 60, or 90 days?
  • Medicare STAR rating
  • Customer service of the plan

Although Medicare Part D prescription drug coverage is optional, failing to get it as either as a stand-alone plan or as part of a Medicare Advantage plan can create financial penalties when buying a plan later on.  The Late Enrollment Penalty (LEP) is designed to incentivize enrollment into PDP plans by charging 1% of the national average PDP cost per month, for every month without creditable coverage. In plain language, those who skip buying a PDP will be charged for the time they didn’t have one when they should have.

Example: A person who had gone several years without a PDP, and signs up for a $0 premium MAPD to gain access to the plan’s dental benefits may find that the private MAPD carrier will collect a $20/mo LEP on behalf of Medicare. A Medicare Beneficiary eligible for Extra Help, also known as Low-Income Subsidy (LIS), would not incur an LEP.

Not all Medicare beneficiaries need to select a PDP. Some folks with employer, governmental, or VA drug benefits will have creditable coverage in force, protecting them from an LEP if they ever choose to elect Part D coverage in the future. Some people with these types of creditable coverage still opt for an MAPD, opting to gain access to the expanded provider networks and benefits.




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