Medicare Plan D
When you sign up for Medicare Plans A & B, these plans will not pay for your prescription drugs. In order to get prescription drug coverage, you need to sign up for Medicare Plan D. Plan D is offered by a variety of private insurance carriers, and these carriers have a wide array of insurance products to choose from. If you choose wisely, you will be able to save a lot of money on medication for years to come. This page is devoted to describing the different features of various Plan D options, and helping you understand what is involved in choosing the best Plan D for you.
The Basics of Plan D
When you sign up for Medicare, you have two choices for getting prescription drugs: 1) Medicare Plan D or 2) a Medicare Advantage Plan (Plan C). If you choose C, your plan will bundle all of your prescription drug costs in with your Hospital and Doctor costs. If you choose Plan D, you have another challenge: choosing between the countless private companies that offer it, and their many options.
Understanding which plan is right for you involves much more that choosing the one with the lowest premium. You will need to take the time to compare the features of each plan to arrive at a total out-of-pocket cost. In addition, you can consider other features, such as Customer service rating, cash flow, and your partnering pharmacy. You can switch plans once a year, at the beginning of the year.
Given these many variables, it is critical to partner with a team of experts that can assist you in making this important decision. CAP Insurance Services has decades of experience in helping people decide between Plan D options. We partner with all of the major insurance carriers and are intimately familiar with the many plans available to our customers. Even if the Plan D option that you favor is not among the products we offer, we can still enable you to sign up for it so that you will have the best possible coverage moving forward.
There are three different types of enrollment periods for Medicare Part D: 1) The initial enrollment period, 2) the annual enrollment period, and 3) special enrollment periods.
As with Medicare Parts A & B, the initial enrollment period is seven months long, and begins three months prior to the month in which you turn 65. It also includes the month in which you turn 65, and the three months after. Ideally, you should enroll for D at the same time as A & B, so that your coverage can begin concurrently.
If you fail to enroll in Plan D within this time frame, you will face a heavy penalty of 10% of the premium cost for each year that you delay in signing up. This penalty lasts for as long as you have Medicare, and it increases along with the cost of your premium. It is imperative that you sign up within the enrollment window to avoid this stiff penalty.
Each Medicare Part D plan must be renewed every year so that your new coverage will start on January 1st. When you renew, you will have the choice of dropping your plan, switching to a new one, or starting one. You must make this change between 10/15 and 12/7 of the current year. If you are enrolling in a plan with a 5-star rating, then you have between 12/30 and 11/8 to enroll for the following year.
Companies are required by Medicare to make any changes to their plans for the coming year and report them by October 1st. This gives you plenty of time to make an informed decision. If you qualify for Medicare Extra Help (for limited income persons), you can drop, switch, or enroll anytime.
Sometimes it is to your advantage to wait until December to make changes. If your doctor may change one of your prescriptions, you would do well to see him or her first, and then use this new information when evaluating a possible change. Failing to do so may result in your paying out of pocket for the new medication if it is not covered.
If you keep the same plan, your costs may change. It is always a good idea to consult with a professional insurance broker each year to determine whether a new plan can save you money on out-of-pocket prescription drug costs. CAP Insurance Services has helped thousands of people go through this process every year, and we can help you as well.
To enroll in a Part D plan, you must live inside that Plan’s coverage area. If you move out of that area, you will have a chance to switch coverages. This is called “special enrollment”, because it is a period unique to your situation. Medicare offers special enrollment periods whenever someone moves to a different county, into a nursing home, or loses access to creditable coverage (e.g. via losing one’s job). As long as the individual enrolls in a new Plan D during this period, they avoid a penalty.
Checking the Formulary
Each plan has its own formulary, which is basically a list of drugs that the plan covers. Each drug on that list is assigned a ranking from 1 to 5, with 1 being the most basic or generic drugs, and 5 being the most specialized, and usually the most expensive. These rankings are called tiers, and are key to assigning costs.
It is important that you make sure that all of your medications are on your plan’s list. If one is not on the list, then you will pay out of pocket for it. This cost can add up, and could negate any savings you may have realized as a result of finding a lower premium.
Basic v Advanced Plans
Often, you have the option of choosing between basic and advanced versions for each plan. A basic plan covers the most common Medicare drugs. An advanced plan covers all of the common drugs, and more.
When you compare plans and companies, it is important to remember that not all companies and plans rate each drug the same. A drug that is considered advanced on one plan might be listed as basic in another. And what is a tier 4 drug with one company might be on tier 3 in another. Knowing how your prescriptions are rated by your various coverage options is critical to making the best choice; even if your plan covers all of your drugs, you could be wasting money if some of your drugs are listed on lower tiers with a different plan.
Plan D premiums average $30-35/month, but can vary widely, from under $20 to over $100. Deductibles are capped by Medicare, can be as low as $0/month. After reaching your deductible, you will be charged only premiums and (possibly) copays until your coverage reaches a certain limit. At that point, you begin to pay a heavy coinsurance. This percentage varies, depending on whether the drug is generic or brand name.
This coverage gap is called the “donut hole”, and it is very expensive for people who have significant drug costs. After you have spent a certain amount in coinsurance in the donut hole, then you enter a “catastrophic coverage phase” in which you pay very small copay’s / coinsurance to get your drugs. This continues until January 1, when your plan starts over again. By 2020, the “donut hole” will close, resulting in a seamless coverage from after you’ve paid the deductible until the end of the year.
The CAP Insurance Services Advantage
Although Medicare provides many tools to help new seniors discern which Plan D option serves them the best, it is common for new enrollees to feel overwhelmed. CAP Insurance Services takes away any uncertainty about signing up for a new plan by carefully explaining every nuance to any plan you might be considering. Premiums, Deductibles, Copays and the Formulary all play key roles in determining which coverage is best for you. Let us help you weigh these different factors appropriately in your decision.
Having said that, there are other reasons why contracting with a top insurance broker is to your benefit. We notice glitches in your plan that you might not when crunching numbers. We have keen insight into these companies’ ability to provide you with excellent customer service. And by signing up through us, you create an important paper trail that could prove valuable in the event that Medicare makes a mistake with your enrollment or coverage.
Prescription drug coverage is no small matter. Although you have seven months to sign up, they can go fast if you are avoiding the difficult task of enrollment out of procrastination. Start gathering your health information, and give us a call. We’ll get you the best possible coverage for your prescription drugs, giving you security for years to come.