Basics Of Medicare Part D
There are two ways to get prescription drug coverage through Medicare Part D.
- Enroll in a stand-alone Medicare prescription drug plan . If you enroll in a stand-alone prescription drug plan, it works alongside your Original Medicare benefits.
- Or, enroll in a Medicare Advantage plan with prescription drug coverage, or an MA-PD. A Medicare Advantage plan is an alternative way to get your Original Medicare benefits. These plans might also offer coverage for additional services like routine vision or dental care, and prescription medications.
Medicare Part D enrollment provides you with choices of plans in most service areas. All plans are required by Medicare to offer a standard level of coverage. Some plans may offer additional benefits beyond this standard. The cost of plans may include monthly premiums, deductibles, copayments, and coinsurance. The amounts can vary from plan to plan.
Prescription Drug plans include formularies, which are a list of the medications that are covered under the plan. Some formularies have tiers. Medications in lower tiers may have lower costs. Generic medications are often included in the lower tiers. When you are preparing for Medicare Part D enrollment, it is important to make sure the medications you take are included in the plans formulary.
Medicare Prescription Drug Plan Availability In 2022
In 2022, 766 PDPs will be offered across the 34 PDP regions nationwide , a substantial reduction of 230 PDPs from 2021 and the first drop in PDP availability since 2017 .
The relatively large decrease in the number of PDPs for 2022 is primarily the result of consolidations of plan offerings sponsored by Cigna and WellCare resulting in the market exit of three national PDPs from each firm in each region. This accounts for just over 200 PDPs offered in 2021 that will no longer be offered in 2022. Enrollees in these non-renewing plans will be automatically switched to other plans offered by the same plan sponsors, although they can choose to switch into a different plan.
Despite the reduction in PDP availability for 2022, beneficiaries in each state will have a choice of multiple stand-alone PDPs, ranging from 19 PDPs in New York to 27 PDPs in Arizona . In addition, beneficiaries will be able to choose from among multiple MA-PDs offered at the local level for coverage of their Medicare benefits.
Can I Decline Medicare Altogether
Medicare isnt exactly mandatory, but it can be complicated to decline. Late enrollment comes with penalties, and some parts of the program are optional to add, like Medicare parts C and D. Medicare parts A and B are the foundation of Medicare, though, and to decline these comes with consequences.
The Social Security Administration oversees the Medicare program, and recommends signing up for Medicare when you are initially eligible, even if you dont plan to retire or use your benefits right away. The exception is when you are still participating in an employer-based health plan, in which case you can sign up for Medicare late, usually without penalty.
While you can decline Medicare altogether, Part A at the very least is premium-free for most people, and wont cost you anything if you elect not to use it. Declining your Medicare Part A and Part B benefits completely is possible, but you are required to withdraw from all of your monthly benefits to do so. This means you can no longer receive Social Security or RRB benefits, and must repay anything you have already received when you withdraw from the program.
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Is Medicare Part A Mandatory
Technically, no Medicare Part A is not mandatory.
If you dont sign up for Medicare Part A, however, you must withdraw from all federal benefits programs. That means you cannot receive Social Security or Railroad Retirement Board benefits. You must also repay any benefits you have already received if you decline Medicare. This is one reason why most people keep their Part A coverage once their eligible.
You will qualify for premium-free Medicare Part A benefits if you worked and paid Medicare taxes for at least 10 full years .
Most beneficiaries qualify for premium-free Part A. Enrolling in Medicare Part A does not kick you off your existing health coverage.
Medicare works with other types of insurance, such as employer coverage, VA insurance and Tricare. If you are still working and have quality health insurance provided by your employer, you can have coordination of benefits to cover your health care costs.
- If your employer has fewer than 20 employees, Medicare will be the primary payer. That means Medicare will pay first for any covered care you receive, and then your employer insurance will pick up the rest of the services covered by that plan.
- If your employer has 20 or more employees, your employer insurance will pay first and Medicare will serve as the secondary payer to pick up any additional covered services.
Some Medicare beneficiaries have to pay a premium for their Part A coverage.
How Does The Medicare Part D Drug Plan Requirement Work
EPIC members are required to be enrolled in a Medicare Part D drug plan or a Medicare Advantage health plan with Part D . Enrolling in EPIC will give a member a Special Enrollment Period to join a Medicare Part D drug plan. Medicare Part D provides primary drug coverage for EPIC members. After a Part D deductible is met, if a member has one, EPIC provides secondary coverage for approved Part D and EPIC covered drugs. EPIC also covers approved Part D-excluded drugs such as prescription vitamins as well as cough and cold preparations after enrolling in a Part D drug plan.
The New York State EPIC program is not Creditable Coverage for members. This means that EPIC benefits are not as generous as Medicare Part D. If a member is not enrolled in a Medicare Part D drug plan, the member will not have any prescription coverage from EPIC or receive any EPIC benefits.
Because EPIC is a State Pharmaceutical Assistance Program, EPIC can provide:
- a Medicare Special Enrollment Period so that a new member may enroll in a Part D drug plan at any time during the year
- a Medicare one-time plan change per calendar year for existing members
- co-payment assistance after the Medicare Part D deductible is met, if the member has one. EPIC also covers approved Part D-excluded drugs once a member is enrolled in a Part D drug plan.
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How Is Epic Used With Medicare Part D
EPIC supplements Medicare Part D drug coverage for greater annual benefits and savings. When purchasing prescription drugs, the member shows both their EPIC and Medicare Part D drug plan cards at the pharmacy. After any Medicare Part D deductible is met, if the member has one, drug costs not covered by Part D can be submitted to EPIC for payment. The member will pay an EPIC co-payment ranging from $3 to $20 based on the cost of the drug. For example, if the EPIC member’s out-of-pocket drug cost is $100, the member will pay $20.
Please note that EPIC deductible members must first meet their EPIC deductible before they pay EPIC co-payments. This is in addition to meeting their Medicare Part D drug plan deductible should their Part D plan have one.
The Truth About Paying The Medicare Part D Penalty
During a recent workshop with seniors at my church, a debate broke out concerning Medicare Part D.
Thats the program that helps pay for prescription drugs. Medicare offers the coverage to all enrollees, and if you elect to get it, you pay a monthly premium.
If you do not sign up for Part D when youre first eligible for Medicare Part A and/or Part B, and you didnt have prescription drug coverage that met Medicares minimum standard, you may have to pay a late enrollment penalty if you eventually decide to join the plan.
Some of the seniors, concerned about facing that penalty, said they had enrolled in Part D even though they already had drug coverage as part of another plan, some with their former employers.
Im not going to pay a penalty, one woman argued, with several others agreeing with her.
But another senior tried to tell her that she wouldnt face a penalty if she later needed Part D. He was right: You dont incur a late penalty if you opt out of getting Plan D because you already have creditable prescription coverage or if you participate in the government program called Extra Help.
The key word here is creditable, which means that your plans coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. If you have drug coverage from an employer, union or other group health plan, you should get a notice every year letting you know whether your drug coverage is creditable.
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The Medicare Catastrophic Coverage Act Of 1988
The Medicare Catastrophic Coverage Act of 1988 began with the 1984 report of the Social Security Advisory Council chaired by Otis Bowen, a physician and former Republican governor of Indiana. The council’s report did not focus on prescription drugs but on the limited hospital coverage provided by Medicare and the out-of-pocket expenses for both hospital and physician services. After Bowen was appointed as secretary of HHS by President Ronald Reagan in November 1985, he urged the White House to support the council’s reform proposals and successfully lobbied for an initial proposal in the 1986 State of the Union address. The combination of Bowen’s interest and changes in the political climatethe Iran/contra scandal in the White House and Democrats regain of control of the Senate after the 1986 election, along with their continuing control of the House of Representativessoon created the opportunity for new Medicare benefits, among them prescription drug coverage .
In the spring of 1988 the chairman of the Senate Finance Committee, Lloyd Bentsen , proved to be the final arbiter when he accepted a drug benefit scaled back to catastrophic coverage and not a routine benefit. Medicare would cover 80 percent of drug costs once the beneficiary met a $600 deductible. The administration, weakened by scandal, did not have the will to fight over prescription drugs, and it ultimately supported the final package .
What Is The Part A Late
If you qualify for premium-free Part A, you dont have to worry about a penalty.
However if you have to pay for Medicare Part A, your monthly premium may go up by 10% if you dont enroll when you are first eligible.
You pay the higher premium for twice the number of years you didnt sign up. For example, if youre eligible for Medicare Part A at 65 and you dont sign up until 67, youll pay the increased premium for 4 years.
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D Appeals And Grievances
Coverage Determinations and Exceptions
All Part D plans must have an appeal process through which members can challenge a denial of drug coverage. The Part D appeals process is based on and similar to the Part C appeals process.
Denials of drug coverage by a PDP or MA-PD are called coverage determinations. For example, a coverage determination may be issued by the plan if the drug is not considered medically necessary or if the drug was obtained from a non-network pharmacy. It is necessary to have a coverage determination in order to initiate an appeal. A doctors supporting statement is not required for this type of appeal, but it may be helpful to submit one. If the request for coverage is denied, the member may proceed to further levels of appeal, including redetermination by the plan, reconsideration by an Independent Review Entity , Administrative Law Judge review, the Medicare Appeals Council , or federal district court.
One type of coverage determination is called an exception request. An exception request is a coverage determination that requires a medical statement of support in order to proceed to appeal. There are two types of exceptions that may be requested:
Formulary Exceptions This type of exception is requested because the member:
- needs a drug that is not on the plans formulary,
- requests to have a utilization management requirement waived for a formulary drug).
What to do When a Drug is Denied at the Pharmacy
The Medical Statement
Issues For The Future
The Medicare drug benefit has helped to reduce out-of-pocket drug spending for enrollees, which is especially important to those with modest incomes or very high drug costs. But in the face of rising drug prices, more plans charging coinsurance rather than flat copayments for covered brand-name drugs, and annual increases in the out-of-pocket spending threshold, many Part D enrollees are likely to face higher out-of-pocket costs for their medications.
Policymakers are currently debating several proposals to control drug spending by Medicare and beneficiaries. Several of these proposals address concerns about the lack of a hard cap on out-of-pocket spending for Part D enrollees, the significant increase in Medicare spending for enrollees with high drug costs, prices for many drugs rising faster than the rate of inflation, and the relatively weak financial incentives faced by Part D plan sponsors to control high drug costs. Such proposals include allowing Medicare to negotiate the price of drugs, restructuring the Part D benefit to add a hard cap on out-of-pocket drug spending, requiring manufacturers to pay a rebate to the federal government if their drug prices increase faster than inflation, and shifting more of the responsibility for catastrophic coverage costs to Part D plans and drug manufacturers.
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Eligibility For Part D
Anyone with Medicare is eligible to enroll in a Part D plan. To enroll in a PDP, the individual must have Part A OR Part B. To enroll in an MA-PD, the individual must have Part A AND Part B.
Enrollees must live in their plans service area. In the case of homeless persons, the following may be used as a permanent residence: a Post Office box, the address of a shelter or clinic, or the address where the person receives mail such as Social Security checks.
PDPs are usually national plans, but MA-PDs have delineated regions, sometimes by state, sometimes by counties within states ). For this reason, MA-PDs may not be appropriate for those who travel a great deal or who maintain summer and winter residences in different areas of the country. NOTE: Some MA-PDs offer passport plans that allow members to obtain benefits outside their normal service areas.
Individuals who reside outside the United States* are not eligible to enroll, but may do so upon their return to the country. Incarcerated individuals may not enroll in Part D, but they may enroll upon release from prison. Prior to 2021, people with end-stage-renal-disease could not enroll in an MA-PD. Starting in 2021, people with ESRD can enroll in Medicare Advantage plans during the annual Open Enrollment Period.
There are no other eligibility restrictions or requirements for Part D.
Who Is Eligible For Medicare Part D
Not everyone is eligible for Part D coverage. To enroll in a Part D plan, you must first meet certain requirements. Part D eligibility requires you to have Original Medicare. If you dont enroll when youre first eligible and dont have creditable coverage, you could face a late enrollment penalty. Lets take a closer look at using an example.
Tip: Medicare Plan D and Part D arent the same things.
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Medicare Part D Notices Required Before October 15
Employers that provide prescription drug coverage to their employees must notify all Medicare-eligible employees regarding the Rx Coverages creditable or non-creditable status under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 . Affected employers must provide the required notices before October 15 each year to coordinate with the start of the annual Medicare open enrollment period. The Medicare Part D notice requirement is generally straightforward, but we still see a flurry of questions every year regarding these notices. We have created this guide to help answer some of the most common employer inquiries.
The Medicare Part D rules state that individuals must pay a higher cost for Medicare Part D coverage if they fail to enroll before the end of their initial Medicare enrollment period unless they delay enrollment because they have creditable Rx Coverage. The Centers for Medicare and Medicaid Services considers Rx Coverage to be creditable if it is actuarially equivalent or greater than the prescription drug coverage under Medicare Part D. Thus, MMA included the Medicare Part D notice rule to ensure that individuals received the information they need to make an informed choice regarding prescription drug options and avoid higher costs Medicare Part D costs for late enrollment.
Manner of Delivery
Additionally, employers choosing electronic delivery must be sure to:
What Does Medicare Part D Cover
Under Medicare Part D, prescription drug plans are available from private, Medicare-approved insurance companies, so benefits and cost-sharing structures differ from plan to plan. However, the Center for Medicare and Medicaid Services sets minimum coverage guidelines for all Part D plans. These rules require all plans to cover medications to treat most illnesses and diseases.
Each Medicare prescription drug plan uses a formulary, which is a list of medications covered by the plan and your costs for each. Most plans use a tiered copayment system. Prescription drugs in the lowest tiers, usually generic medications, have lower copayments. Brand-name and specialty medications in the higher tiers cost more out-of-pocket.
Medicare Part D only covers prescription drugs that are FDA approved. Experimental medications are generally not covered.
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Is It Mandatory To Go On Medicare When You Turn 65
While registering for the Medicare program is often automatic, you dont have to sign up if you arent automatically enrolled. If you decide to delay Medicare enrollment because you or your spouse have health insurance coverage through an employer or another source, you may be able to enroll in Medicare Part A and/or Part B at a later date without facing late enrollment penalties.
As with all your health care decisions, you can choose whether to be part of the Medicare program or not. However, there are consequences for declining or delaying enrollment.