Part D Drug Coverage
Medicare loves using letters of the alphabet to designate certain healthcare coverage. D for Drug is the only letter that stands for what it is.
There’s Medicare A that covers you at the hospital. There’s Medicare B that covers medical. There’s Medicare C (Medicare Advantage) that combines Part A and Part B and usually Part D.
Then there’s Medicare Supplement plans A, B, C, D, F, G, K, L, M & N.
So you could have Medicare A and Medicare B plus Medicare Part D, Plus a Medicare Supplement D. That’s too many letters, in my opinion.
Who Can Get Medicare Part D Drug Coverage?
Medicare Part D drug coverage becomes available when a Medicare beneficiary receives Medicare Part A through age or disability. You do not need Medicare Part B to have Medicare drug coverage.
WARNING! Not All Drug Plans Are Created Equal
The fact that there are so many stand-alone Part D drug plans to pick from is one of the main issues with Medicare Part D. In Virginia, where I live, there are currently 30 different drug plans that are administered by 10 different insurance companies. Not only can the plans vary greatly from company to company, they can vary greatly within the same company.
The plans can and usually do change each year. One year you could have a good drug plan and the next year that same plan is a horrible drug plan for you.
If you don’t take any medications or you take only cheap generics, then usually it’s not a big deal. But, if you are on more expensive generics and brand name drugs, then it can be an issue. Not checking each year to see which plan(s) are the least expensive could cost you thousands of dollars.
Here’s a real life example with one of my clients: Several years ago, I met with an individual that had Type II Diabetes and was on two different insulin drugs. By using the Medicare Rx Calculator, I determined that if she stayed on her existing Part D plan she would have out-of-pocket costs of over $5,000 per year. But, if she switched do a different plan, then her costs would be reduced to just over $1,600 per year. That’s a $3,400 savings from one plan to the next. Same medications and getting them at the same pharmacy. You can access the Medicare Rx Calculator at Medicare.gov or, you can contact me for help.
Part D Late Enrollment Penalty
If you don’t take Medicare Part D drug coverage when it’s first available to you and you don’t have comparable drug coverage through an employer, union or the government, then if you ever get Medicare Part D in the future, you will incur a Part D late enrollment penalty. This is not a one-time penalty…this is an ongoing penalty added to your monthly premium and continues until you either die or disenroll from your Part D drug plan.
Medicare states: “The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($33.06 in 2021) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
The national base beneficiary premium may change each year, so your penalty amount may also change each year.”
You can access a Part D penalty calculator online like this one to estimate your penalty: https://www.amplicare.com/ customers/patients
But, to be sure, contact Medicare and they will tell you exactly what your penalty will be.
Should You Get Drug Coverage If You Don’t Take Any Prescriptions?
I get asked this question a lot. Most Medicare beneficiaries are on some type of prescribed medication, so it is usually in their best interest to have drug coverage.
But what if you don’t take any medications or maybe you take a cheap generic drug…what should you do?
Here’s what I tell my clients: The choice is yours. You do not need to take Part D drug coverage, but there are two reasons why you should.
The Penalty: If you decide you want it later, you will incur that Part D penalty.
The Untold Risk: This is the most important reason why someone should get Part D coverage even if you don’t take any medications. If, in the future, your doctor prescribes a very expensive medication, you can not run out at any time of the year and enroll into a Part D plan to cover that drug (unless you are on Medicaid, qualify for Social Security Extra Help, have Tricare or have VA Benefits). That means you could potentially have to pay hundreds to thousands of dollars per month for that drug for the remainder of the calendar year.
If you don’t think drugs are expensive—check out this list of the top 10 most expensive drugs. Anywhere from $678,000 to over $2 million dollars (https://www.goodrx.com/blog/most-expensive-drugs-period/).
While I’ve have never known one of my clients to pay that much for a medication, I have had some clients prescribed medications that cost over $100,000 per year. It’s a good thing they have Part D drug coverage.
Who Doesn’t Need Part D Drug Coverage?
• Military veterans with VA Benefits (but many do get Part D as a back up)
• Tricare beneficiaries
• Group, union or retiree beneficiaries that have Medicare Part D comparable drug coverage with their existing coverage.
Drug Pricing Is Corrupt!
You and I should be thankful for many of the medications that are developed and made available. They truly can be a life saver for some people.
But from the pharmaceutical companies down to the pharmacies, there’s pricing corruption.
Most pharmaceutical companies offer discounts on their more expensive medications…but not for everyone. You must qualify. If you make $1 too much in income, you could lose out on saving thousands or tens of thousands of dollars on the cost of your medications.
Want to learn how drug pricing works? Check out this article on GoodRx: https://www.goodrx.com/blog/heres-the-real-price-of-prescription-drugs/
If you need help with the cost of your medications, check out my section on Rx Help.
If you want my help in determing the lowest overall Medicare Part D Drug Plan, then download the following pdf spreadsheet, fill it out and e-mail it to me at Chris@TheMedicareAnalyst.com. Download here: https://themedicareanalyst.com/wp-content/uploads/2023/09/Rx-List-Spreadsheet.pdf/
