Medicare Part D has proven to be a popular and successful program, allowing seniors and disabled individuals access to affordable medications. Understanding the enrollment process and choosing the best plan, though, can be challenging for consumers.
When approaching the age of 65, consumers have a seven month window in which to sign up for a drug plan, beginning three months before and ending three months after the month of their birthday. For example, someone with a birthday of June 6, can sign up for a Medicare drug plan from March through September. For someone signing up during the first three months of their initial enrollment period, the plan will take effect the first of the month of their birthday. Signing up during or after the month of their birthday means that coverage will begin the first of the following month. For those eligible for Medicare due to a disability, the initial enrollment period is also seven months and is determined by the date on which disability benefits are initiated.
Choosing a Plan
The plans that are offered differ by state, but all states have multiple plans to choose from. The plans all have a monthly premium, like any insurance policy, and some have a deductible, as well. Each plan also has a “formulary,” which is the list of drugs that are covered by the plan. The formularies can differ substantially from one plan to the next, but all plans are required to cover the drugs that are most likely to be used. Companies offering the drug plans set the prices that consumers will be charged for the medications, so there are also differences in drug costs across plans. Making sense of all of these variables is difficult, so the government has set up a tool called the “Medicare Plan Finder” at the Medicare website, Medicare.gov. The tool allows Medicare recipients to enter very specific information on the drugs they take, including dosages and frequency. The result is a list of the available plans, customized to reflect the individual’s current prescriptions and the associated costs. Consumers can then choose the most cost-effective plan that will cover the medications they currently take.
Annual Open Enrollment
Once a consumer is enrolled in a Medicare drug plan, the plan will remain effective until the end of the calendar year. At the end of each year, during the annual open enrollment period, Medicare recipients may reevaluate their plans and determine if their current plan will still be the best one for them in the coming year. As plans do change from year to year, it is often the case that changing to a new plan for the next calendar year can save money. The program was designed to make this annual change easy; once a consumer enrolls in a new plan, the old plan is cancelled at the end of the year and the new one takes effect as of January 1.
A Word on the Donut Hole
A provision of Medicare Part D that has been problematic for many with high drug costs is the coverage gap or “donut hole.” Under that provision, when the costs paid by the insured and the insurer reached a specific dollar amount, the insured individual is be required to take on a larger percentage of their drug costs. As a result of the Affordable Care Act, the donut hole is being eliminated and will disappear completely by the year 2020.