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Prescription drug coverage is an important component of any medical insurance plan, including Medicare. There are several ways you can get prescription drug coverage when you are a Medicare beneficiary. You can get coverage as part of a Medicare Part D drug coverage plan, Medicare Advantage Plan, employer or union, and other sources.
When you have Original Medicare (Part A and B) you can decide to also get a Medicare Part D Plan. These plans are run by private companies but administered through Medicare. When you join, you usually pay a monthly premium with deductibles and copayments. Another Medicare option for prescription drug coverage is through a Medicare Advantage Plan. Most Medicare Advantage Plans usually offer drug coverage. If your plan offers drug coverage you usually need to get coverage through your plan. If your Medicare Advantage Plan does not have drug coverage you can join a Medicare Part D Plan. It is important to note - If you do not have creditable prescription drug coverage and decide to add it after you are enrolled, you may have to pay a late enrollment fee.
The Part D late enrollment penalty is added to your Part D premium. It is not a one-time fine. This fine is imposed for two reasons. First you did not join a Medicare drug plan when you first became eligible and you did not have creditable coverage from another source. Second, you didn't have Medicare or other creditable coverage for 63 days in a row or longer. People who received Extra Help are exempt from this late enrollment penalty. Extra Help is offered to those of limited means.
However, you can avoid late enrollment penalty. One simple way is to join when you are first eligible. Even if you didn't have coverage before you still won't pay the penalty. Another simple way is to not go more than 63 days in a row without creditable coverage after you are eligible. Creditable coverage includes coverage through employer (or former employer), a union, TRICARE (military coverage), Indian Health Service, the Veterans Administration, or health insurance. Each year, the plan should send a letter telling you that the coverage is creditable. Keeping that letter is a good idea for when you do want to join a Medicare prescription drug plan.
When you join a Medicare prescription drug plan tell the plan about any coverage you had, when they ask. If the plan thinks you went without coverage for more than 63 days they will send you a letter and form. Be sure to complete the form and return it or you may have to pay the penalty. Documentation can save you money.
If you are obligated to pay a penalty, how long you went without coverage matters. The way this is figured currently is by multiplying 1% of the "national base beneficiary premium" and the number of full, uncovered months you were eligible but didn't join a Medicare drug plan and had no other creditable coverage. The amount is rounded to the nearest ten cents and added to your monthly premium. The "national base beneficiary premium" changes and therefore the penalty amount can increase each year. You may have to pay the penalty for as long as you have a Medicare drug plan.
You can contest your late enrollment penalty and ask Medicare to reconsider. Your plan can send you a "reconsideration request form" to fill out. You will need to provide proof to support your case and document prescription drug coverage you have had previously, so be sure to save correspondence related to your creditable coverage.
To avoid the penalty, be sure to have creditable prescription drug coverage. Even if you do not currently take many prescription drugs, you may medically need them in the future. Should you suddenly have higher drug costs, Medicare pays up to 95% of costs after you pay $4550 out-of pocket in a given year. The costs of prescription drugs can add up quickly.
If you want to keep your Original Medicare Part A and B coverage join a Medicare Prescription Drug Plan (Part D). You can also get a Medicare Advantage Plan which covers doctor, hospitals and prescriptions. The Medicare Advantage plans have extra benefits and are usually cheaper - but you have to use doctors and hospitals from the plan's network.
Costs for a Part D plan added to Original Medicare includes a monthly premium, yearly deductible, and copayment/coinsurance. The copayment/coinsurance continues until both the insurer and Medicare beneficiary have spent $2,840, including the deductible. In 2011, the "coverage gap" is reached. Between spending $2,840 and $4,550, Medicare provides for a 50% discount on covered brand-name prescription drugs. Once $4,550 has been spent "out-of-pocket" you would pay only a small copayment for the rest of the year.
The costs of having no prescription coverage can turn out to be higher than the cost of having it. Increased premiums when you sign up are only part of it. If you have an unexpected medical need for prescriptions and have to pay for all of them out-of-pocket, the money can add up quickly as well.
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