Medicare Part D Prescription Drug Plans

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Medicare Part D Prescription Drug Plans

Part D adds prescription drug coverage to Original Medicare and some Medicare Advantage plans. These plans are offered by private companies approved by Medicare, and must follow guidelines established by The Centers for Medicare and Medicaid Services.

When to enroll in Medicare Part D

If you are enrolled in Medicare Part A and/or Part B and live in your plan’s service area, you can enroll in the Medicare drug benefit (Part D) during your Initial Enrollment Period (IEP).

Your IEP for Part D will usually be the same as for Part B: the seven-month period that includes the three months before the month you become eligible for Medicare, the month you are eligible, and three months after the month you become eligible. For example, if you become eligible for Medicare when you turn 65 on May 15, your IEP will be February 1 to August 31.

  • Note: If you are disabled and are turning 65 you will qualify for a new Part D IEP. That IEP will last seven months including the three months before you turn 65, the month you turn 65, and the three months after you turn 65. If you were paying a Medicare drug benefit premium penalty because you signed up late for Part D before you turned 65, you will no longer have to pay this once your Part D IEP begins.

If you join a Medicare drug plan during the three months before you are eligible for Medicare, your coverage will start the month you become eligible. If you join a Medicare drug plan during the month you become eligible, or during the three months afterward, your drug coverage will start the first of the month after you enroll. You should enroll early during your IEP to make sure that your coverage begins as soon as you are eligible.

If you do not join a Medicare drug plan during your Initial Enrollment Period, you may not be able to enroll until Fall Annual Enrollment. Annual Enrollment begins October 15 and ends December 7. Changes and enrollments made during Annual Enrollment become effective January 1. You may also have to pay a premium penalty.

You may also have a Special Enrollment Period to enroll in Part D under exceptional circumstances, including if:

  • you get Extra Help; or
  • you lose employer drug coverage.

How to get drug coverage

Medicare offers prescription drug coverage to everyone with Medicare. If you decide not to get Medicare drug coverage when you're first eligible, you'll likely pay a late enrollment penalty unless one of these applies:

  • You have other creditable prescription drug coverage
  • You get Extra Help: Low-Income Subsidy (LIS) or Medicaid

To get Medicare drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and drugs covered.

What’s the Part D late enrollment penalty?

The late enrollment penalty is an amount that’s added to your Part D premium. You may owe a late enrollment penalty if, at any time after your Initial Enrollment Period is over, there’s a period of 63 or more days in a row when you don’t have Part D or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Part D coverage.

  • Note: If you get Extra Help, you don’t pay a late enrollment penalty.

3 ways to avoid paying a penalty:

  1. Join a Medicare drug plan when you’re first eligible. Even if you don’t take many prescriptions now, you should consider joining a Medicare drug plan to avoid a penalty. You may be able to find a plan that meets your needs with little to no monthly premiums.
  2. Don’t go 63 days or more in a row without a Medicare drug plan or other creditable coverage. Creditable prescription drug coverage could include drug coverage from a current or former employer or union, TRICARE, Indian Health Service, the Department of Veterans Affairs, or health coverage. Your plan must tell you each year if your drug coverage is creditable coverage.
  3. Tell your Copeland agent about any drug coverage you had if they ask about it. If you don’t tell the agent about your creditable prescription drug coverage, you may have to pay a penalty for as long as you have Part D coverage.

How much more will I pay?

The cost of the late enrollment penalty depends on how long you didn’t have creditable prescription drug coverage. Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” by the number of full, uncovered months that you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. Since the “national base beneficiary premium” may increase each year, the penalty amount may also increase each year. After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be.

Consider all your drug coverage choices

Before you decide, learn how Part D works with your other drug coverage. For example, you may have drug coverage from an employer or union, TRICARE, the Department of Veterans Affairs (VA), or the Indian Health Service. Compare your current coverage to Medicare drug coverage. The drug coverage you already have may change because of Medicare drug coverage, so consider all your coverage options.

If you have (or are eligible for) other types of drug coverage, read all the materials you get from your insurer or plan provider. Talk to your Copeland licensed agent before you make any changes to your current coverage.

The 4 stages of Medicare Part D Program


Stage 1
Annual Deductible


Stage 2
Initial Coverage


Stage 3
Coverage Gap


Stage 4
Catastrophic Coverage

Annual Deductible

Stage 1

Begins: With your first prescription of the plan year.

You pay the full cost of your prescriptions until your spending adds up to the amount of your deductible. So, if your plan has a $0 deductible, you skip straight to the next stage. Keep in mind that some deductibles may only apply to drugs on specific tiers, which means you may not have any deductible if you do not take any medications on those tiers. Any payments for your monthly premium or for medications on tiers that do not apply to the deductible are not counted toward reaching the deductible.

Initial Coverage

Stage 2

Begins: Immediately if your plan has no deductible. Or, when the prescription payments you have made equal your plan's deductible.

Your plan pays for a portion of each prescription drug you purchase, as long as that medication is covered under the plan's formulary (list of covered drugs). You pay the other portion, which is either a copayment (a set dollar amount) or coinsurance (a percentage of the drug's cost). The amount you pay will depend on the tier level assigned to your drug.1 This stage ends when the amount spent by you and your plan on your covered drugs adds up to equal the initial coverage limit set by Medicare for that year. In 2023 that limit is $4,660. Your monthly premium payments do not count toward reaching that limit.

Coverage Gap

Stage 3

Begins: When you and your plan have collectively spent $4,460 on your covered drugs.

Not everyone will enter the coverage gap (also referred to as the "donut hole"). In the coverage gap, the plan is temporarily limited in how much it can pay for your drugs. If you do enter the gap, you'll pay 25% of the plan's cost for covered brand-name drugs and 25% of the plan's cost for covered generic drugs.

Keep in mind that while the percentage you pay for brand-name drugs is lower, the price of that drug may be much higher than the generic option. Calculate the amount you would owe for each to see which one really offers the best cost savings for you.

You exit the coverage gap when your total out-of-pocket cost on covered drugs (not including premiums) reaches $7,400. Your out-of-pocket cost is calculated by adding together all of the following: yearly deductible, coinsurance, and copayments from the entire plan year, and what you paid for drugs in the coverage gap (including the discounted amounts you didn't pay in that stage).

Catastrophic Coverage

Stage 4

Begins: When your out-of-pocket costs reach $7,050 on covered drugs.

After your out-of-pocket cost totals $7,050, you exit the gap and get catastrophic coverage. In the catastrophic stage, you will pay a low coinsurance or copayment amount (which is set by Medicare) for all of your covered prescription drugs. That means the plan and the government pay for the rest – about 95% of the cost. You will remain in this phase until the end of the plan year.

Catastrophic coverage

Once you get out of the coverage gap, you automatically get “catastrophic coverage.” With catastrophic coverage, you only pay a coinsurance amount or copayment for covered drugs for the rest of the year.

Should I review my Medicare Part D plan choice every year?

It is very important that you review your drug plan every year. Medicare drug plans can change their costs and the list of drugs that they cover every year.

Most people can only change Medicare drug plans during the Annual Enrollment Period, which runs from October 15 to December 7 each year.

Even if you are satisfied with your current Medicare coverage, you should check if there is another plan in your area that offers better coverage at a lower price. Have a Copeland Insurance agent look at other Medicare options in your area and compare them with your present coverage to see which plan will best suit your needs in the upcoming year. Research shows that people with Part D plans could lower their costs by shopping among plans each year. For example, another Part D plan in your area may cover the drugs you take with fewer restrictions and charge you less.

When choosing a Medicare drug plan, make sure to look at all the costs, not just the premium. Your costs throughout the year will depend on what drugs you take, whether your plan covers them, and whether there are any coverage restrictions. Another plan may have lower copays, cover more of your drugs, have fewer restrictions or offer some coverage during the coverage gap.

If you are considering joining a Medicare Advantage Plan to get drug coverage, remember that you will get all your Medicare benefits from that plan. Look beyond the drug coverage; make sure the plan covers you to go to the doctors, hospitals, and pharmacies you prefer to use at a cost you can afford.

How to review your current plan:

  • Review your plan’s Annual Notice of Change. Each fall, your Medicare drug plan will send you a notice explaining how your plan’s coverage and costs are changing for the next year. Your plan must send you this notice before September 30th. If you do not receive it by this time, call your Copeland sales agent.
  • Find out whether your drugs will be covered next year. You should call your agent and ask, as plans are only required to send you a shortened list of covered drugs (formulary). Also, find out if your copays will change and whether the plan is adding any coverage restrictions that will require your doctor to ask for special permission before the plan will cover your drugs.

If your doctor had to make a special request for your plan to cover a drug for you this year (such as a prior authorization or exception request), and you will need the same medication next year, call your agent and find out what you must do to make sure your plan keeps covering your drug. Your doctor may have to make a new request, and he may be able to do so before the end of this year to ensure your drug will still be covered next year.

If your plan will no longer cover a drug you are taking, your plan must help you complete the exception process or change to another formulary drug before the end of the year. If the plan fails to do this, your plan must provide you a 30-day supply of the drug during the first 90 days of the year, and send you a notice explaining that the prescription is temporary and that you must file an exception to continue taking it.

Once you have reviewed your current plan, see what other options are available in your area. Call Copeland Insurance Group and a licensed sales agent can help you find what you have available.

Changing your Medicare Part D Plan

In most cases, you will only be able to change your Medicare prescription drug plan once a year during Fall Annual Enrollment Period. Fall Annual Enrollment Period occurs between October 15 and December 7 of every year. If you make a change during this time, your new coverage will begin January 1. You can change plans as many times as you need during Fall Annual Enrollment Period, with your last choice taking effect January 1. However, to avoid enrollment problems, it is best to make as few changes as possible.

You may also be able to change plans during a Special Enrollment Period (SEP) if any of the following events takes place:

  • You have or lose Extra Help.
  • You move out of your plan’s service area.
  • You are admitted into or reside in a qualifying institution.
  • You choose to change your employer, retiree, or union prescription drug coverage for any reason.
  • You disenroll from your Medicare Advantage Plan and go back to Original Medicare if you joined the plan when you first qualified for Medicare based on age and want to disenroll within the first year you joined the plan.
  • Your Medicare prescription drug plan stops offering coverage, fails to provide benefits on a timely basis, or misled you about what benefits you would get.
  • You receive inadequate information about whether your existing prescription drug coverage is comparable to Medicare’s.
  • You enroll or fail to enroll in a Medicare prescription drug plan because of a federal employee’s error.
  • You enroll in an All-inclusive Care for the Elderly (PACE) program.
  • You become eligible for a Special Needs Plan (SNP).
  • There is a five out of five-star plan in your service area you would like to switch join. You have an SEP to switch into a five-star plan from your current plan. The five-star SEP encourages Medicare Advantage and stand-alone Part D plans to improve their quality ratings. You can enroll into a new Medicare Advantage Plan or stand-alone Part D plan that was given an overall plan performance rating of five-stars once per calendar year.

After the first 60 days of the year, a Medicare prescription drug plan can change the drugs it covers (its formulary). However, your plan should continue to cover the drug until the end of the calendar year unless there are safety issues or there is a generic form of your drug.

You do not have the right to a Special Enrollment Period if your plan stops covering a drug you need.

To switch plans, you should usually enroll in your new plan without disenrolling from your old plan. Enroll early during an enrollment period to make sure that your new coverage starts when it should. You will be automatically disenrolled from your previous Medicare drug plan when your new coverage starts.

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