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Is Medicare Prescription Drug Coverage Mandatory

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The Impasse Before And After The 2000 Presidential Election

Medicare Prescription Drug Coverage

In the wake of the bipartisan commission’s deliberations, Senator Breaux and Representative Thomas joined Senator Bill Frist on a series of proposals to include a prescription drug benefit as essentially an inducement for beneficiaries to shift from the traditional fee-for-service program to a private health plan. More liberal and moderate members of Congress introduced proposals for an independent outpatient prescription drug benefit in the Medicare program.

In addition, in his 1999 State of the Union address, President Clinton proposed his own plan for a voluntary outpatient prescription drug benefit available to all Medicare beneficiaries. A new Part D drug benefit premium would be established, providing subsidies for low-income beneficiaries with incomes below 150 percent of poverty. This plan introduced the idea of combining modest benefits for most if not all beneficiaries with stop-loss protection for the relatively few enrollees with catastrophic costs. Medicare would cover 50 percent of an enrollee’s first $5,000 in annual drug spending and 100 percent of any additional expenses .

Another reason for the deadlock was that the amount proposed in the president’s budget was only one-tenth of what the Congressional Budget Office projected that the Medicare population would spend on prescription drugs during that period. Heading into the 2002 election, Democrats reasoned that no benefit was better than an inadequate benefit.

Is Medicare Part D Optional

Yes. Unlike Medicare Part A and Part B , you are not required to enroll in a Medicare prescription drug plan .

However, you are required to apply within your designated Initial Enrolment Period or you will risk paying a late enrolment penalty on top of your monthly premium for the duration of your coverage.

Is Medicare Part D Optional Or Mandatory

It is not mandatory to enroll into a Medicare Part D Prescription Drug Plan. However, if you go without creditable prescription drug coverage for 63 or more days in a row after youâre first eligible for Medicare, you may have to pay a late-enrollment penalty if you enroll into a Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug plan later.

Read below to find out more about what kinds of coverage can help you avoid this penalty, when you can enroll in a Medicare Part D Prescription Drug Plan or Medicare Advantage Prescription Drug plan, and other information regarding the late-enrollment penalty.

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What Medicare Part D Drug Plans Cover

All plans must cover a wide range of prescription drugs that people with Medicare take, including most drugs in certain protected classes, like drugs to treat cancer or HIV/AIDS. A plans list of covered drugs is called a formulary, and each plan has its own formulary. Medicare drug coverage typically places drugs into different levels, called tiers, on their formularies. Drugs in each tier have a different cost. For example, a drug in a lower tier will generally cost you less than a drug in a higher tier.

Switching From Medicare To An Employers Health Plan

Prescription Drug Coverage

If a person enrolled in Medicare during their IEP, they can take one of several actions.

For example, they may drop Medicare and join their employers qualifying health plan, or they may choose to keep Medicare along with joining their employers large-group health plan. In this case, Medicare is secondary insurance.

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Can You Refuse Medicare Part D Plans

Medicare Part D is voluntary. In some circumstances you may not need it if you are receiving âcreditableâ prescription drug coverage elsewhere such as an employer or union, retiree benefits, COBRA or the Veterans Affairs health program â all of which must by law tell you whether it is creditable.

However, if you refuse coverage and donât have alternative coverage there are consequences to not enrolling in a Medicare Part D prescription drug plan when first eligible:

  • You would be without any prescription drug coverage and if you for some reason urgently need them, you wouldnât be able to receive Medicare Part D benefits immediately. You would need to wait until the next Annual Enrollment Period that runs from October 15 â December 7 each year. Once enrolled, coverage wouldnât begin until January 1 after this period.
  • You would also become liable for any late penalties. These late penalties can take the form of surcharges that are added to your Medicare Part D plan premiums for as long as you remain in the Part D program.

What Is The Medicare Part D Late

If youâve gone 63 consecutive days without creditable prescription drug coverage, either because you didnât enroll when you were first eligible or because you lost your creditable coverage and didnât get new coverage in time, then you may have to pay a late-enrollment penalty when you do enroll into Medicare Part D.

The Medicare Part D late-enrollment penalty is added to the premium of the Part D Prescription Drug Plan you enroll into. Your Medicare Prescription Drug Plan determines this penalty by first calculating the number of uncovered months you were eligible for Medicare Part D, but didnât enroll under Part D or have creditable coverage. Your Medicare Prescription Drug Plan will then ask you if you had creditable prescription drug coverage during this time. If you didnât have creditable prescription drug coverage for 63 or more days in a row after you were first eligible, the Medicare Prescription Drug Plan must report the number of uncovered months to Medicare.

For example, letâs say you disenrolled from your Medicare Prescription Drug Plan effective February 28, 2022, and then decided to enroll into another Medicare Prescription Drug Plan during the Annual Election Period, with an effective date of January 1, 2023. This means you didnât have creditable prescription drug coverage from March 2022 through December 2022, which adds up to 10 uncovered months.

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Timing / Delivery Of Notices

Notice of Creditable Coverage must be provided to Medicare-eligible individuals:

  • Prior to October 15
  • Prior to an individuals initial enrollment period in Medicare Part D
  • Prior to the effective date of an individuals enrollment in prescription drug coverage
  • Upon termination of prescription drug coverage or upon any change that affects whether the coverage is creditable and
  • Upon request by the individual.

With respect to the manner in which notices are provided, CMS has indicated that employers may:

  • Include the notice with other plan information
  • If the notices are included as a part of a larger booklet of benefits information, a reference to the section containing the notice must be on the first page, and the reference must be in a box using 14 point bold font that is offset
  • Provide a single notice to the Medicare-eligible individual and covered spouse and/or dependents however, a separate notice must be provided if the employer has knowledge of separate residences and
  • Provide electronic notices if the individual has indicated to the employer that he or she has adequate access to electronic information and has been informed of:
  • His or her right to a paper version
  • How to withdraw his or her consent to receive notices electronically
  • How to update address information and
  • Any hardware or software requirements necessary to access and retain the notice.

Changes To Part D Under The Inflation Reduction Act

2021 How to use Medicare Plan Finder, step-by-step

With the passage of the Inflation Reduction Act, which includes several provisions to lower prescription drug spending by Medicare and beneficiaries, major changes are coming to the Medicare Part D program. These provisions will phase in over the next several years starting in 2023. The law:

  • requires drug manufacturers to pay a rebate to the federal government if prices for drugs covered under Part D and Part B increase faster than the rate of inflation, with the initial period for measuring Part D drug price increases running from October 2022-September 2023
  • adds a hard cap on out-of-pocket drug spending under Part D by eliminating the 5% coinsurance requirement for catastrophic coverage in 2024 and capping out-of-pocket spending at $2,000 in 2025
  • shifts more of the responsibility for catastrophic coverage costs to Part D plans and drug manufacturers, starting in 2025
  • limits the price of insulin products to no more than $35 per month in all Part D plans and makes adult vaccines covered under Part D available for free, as of 2023, and
  • expands eligibility for full benefits under the Part D Low-Income Subsidy program in 2024.

CBO estimates that the drug pricing provisions in the law will reduce the federal deficit by $237 billion over 10 years .

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There Are 2 Ways To Get Medicare Drug Coverage:

1. Medicare drug plans. These plans add drug coverage to Original Medicare, some Medicare Cost Plans, some Private FeeforService plans, and Medical Savings Account plans. You must have

and/or

to join a separate Medicare drug plan.

or other

with drug coverage. You get all of your Part A, Part B, and drug coverage, through these plans. Remember, you must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage.

To join a Medicare drug plan, Medicare Advantage Plan, or other Medicare health plan with drug coverage, you must be a United States citizen or lawfully present in the United States.

Visit Medicare.gov/plan-compare to get specific Medicare drug plan and Medicare Advantage Plan costs, and call the plans youre interested in to get more details. For help comparing plan costs, contact your State Health Insurance Assistance Program .

Enrolling In A Part D Prescription Drug Plan

To get a PDP plan, you will have to enroll directly with the plan provider. Unless you qualify for aSpecial Enrollment Period due to working past 65, its best to enroll in Part D when youre first eligible for Medicare. This will be during your Initial Enrollment Period.

If you do not enroll in Part D when first eligible and do not qualify for a Special Enrollment Period, you could face financial penalties. You can learn about financial penalties in this blog.

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How Much Does Medicare Part D Cost

According to the Kaiser Family Foundation, in 2022, PDP monthly premiums range from $5.50 to $207.20, depending on where you live and which type of plan you have. The national standard monthly premium for 2022 is set at approximately $33, but you may pay an income-related surcharge if your income is higher .

Insurers can offer up to three PDPs, and most have a basic, midrange, and comprehensive plan. The comprehensive plans are the most expensive and typically include the Senior Savings Model, making insulin more affordable. You pay a monthly premium for a PDP. You pay copays or coinsurance after meeting your annual deductible if you access your prescription drug benefits.

Costs for Medicare Part D prescription drug coverage vary depending on these factors:

How Do I Find The Best Medicare Drug Plan For My Needs

Medicare Fitness Coverage Without UHC and Silver Sneakers

A licensed insurance agent can help you compare Medicare Advantage plans and Medicare prescription drug plans that are available in your area. They can help you explore important factors such as the costs of each plan, what pharmacies near you are accepted by the plan and how much your drugs cost with the plan.

You can also compare plans online for free, all from the comfort of your home and with no obligation to enroll.

Compare Medicare plans in your area

Or call 1-800-557-6059TTY Users: 711 to speak with a licensed insurance agent. We accept calls 24/7!

1 Jacobson G, et al. . Medicare Advantage 2020 Spotlight: First Look. Kaiser Family Foundation . Retrieved from https://www.kff.org/report-section/medicare-advantage-2020-spotlight-first-look-data-note.

2 Cubanski J, Damico A. . Medicare Part D: A First Look at Prescription Drug Plans in 2020. KFF. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-part-d-a-first-look-at-prescription-drug-plans-in-2020.

3 Cubanski J, et al. . 10 Things to Know About Medicare Part D Coverage and Costs in 2019. KFF. Retrieved from https://www.kff.org/medicare/issue-brief/10-things-to-know-about-medicare-part-d-coverage-and-costs-in-2019.

About the author

Christians work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelors degree in journalism.

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An Overview Of The Medicare Part D Prescription Drug Benefit

Medicare Part D is a voluntary outpatient prescription drug benefit for people with Medicare provided through private plans that contract with the federal government. Beneficiaries can choose to enroll in either a stand-alone prescription drug plan to supplement traditional Medicare or a Medicare Advantage plan, mainly HMOs and PPOs, that provides all Medicare-covered benefits, including prescription drugs . In 2022, 49 million of the 65 million people covered by Medicare are enrolled in Part D plans. This fact sheet provides an overview of the Medicare Part D program, plan availability, enrollment, and spending and financing, based on data from the Centers for Medicare & Medicaid Services , the Congressional Budget Office , and other sources. It also provides an overview of upcoming changes to the Part D benefit based on provisions in the Inflation Reduction Act.

New Addition Of Race And Ethnicity Data Fields On The Pdp Model Enrollment Request Form

On July 5, 2022, CMS released the Model Individual Enrollment Request Form to Enroll in a Medicare Advantage Plan or Medicare Prescription Drug Plan , and Advance Announcement of January 2023 Software Release – Addition of Race and Ethnicity Data Fields on Enrollment Transactions memorandum via HPMS to announce the addition of race and ethnicity data fields on the model PDP enrollment form, OMB No. 0938-1378. These new fields are required to be included on the enrollment form however, applicant response to these questions is optional.

Part D plans are expected to use the new form for enrollment requests received on or after January 1, 2023. The new form should be used for all enrollments after January 1, 2023.

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Recent Articles And Updates

For older articles, please see our article archive.

References

The 2010 Medicare Part D $250 Donut Hole Rebate. Q1Group LLC, .

2020 Part D Income-Related Monthly Premium Adjustment. . .

2021 Medicare Part D Outlook. Q1Group LLC, .

2021 Part D Income-Related Monthly Premium Adjustment. . .

How Do Medicare Advantage Ppo Plans Work? Healthline Media, May 5, 2021, .

Analysis of Part D Beneficiary Access to Preferred Cost Sharing Pharmacies . . .

Announcement of Calendar Year 2021 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies. . .

Assistance with Paying for Prescription Drugs. Center for Medicare Advocacy, November 30, 2015, .

How Medicare Part D Works. AARP, October 2016, .

Medicare Advantage Special Needs Plans . Healthline Media, May 3, 2021, .

Kirchhoff, Suzanne M. Medicare Coverage of End-Stage Renal Disease . . .

Medicare Prescription Drug Plan Availability In 2023

Medicare & You: How the Part D Penalty is Calculated

In 2023, 801 PDPs will be offered across the 34 PDP regions nationwide , a 5% increase from 2022 .

Beneficiaries in each state will have a choice of multiple stand-alone PDPs, ranging from 19 PDPs in New York to 28 PDPs in Arizona . In addition, beneficiaries will be able to choose from among multiple MA-PDs available at the local level.

In 2023, under a provision in the Inflation Reduction Act, Part D enrollees will pay no more than $35 per month for covered insulin products in all Part D plans. This new requirement builds on a current Innovation Center model in which only participating enhanced Part D plans cover insulin products at a monthly copayment of $35 in the deductible, initial coverage, and coverage gap phases of the Part D benefit. In 2023, a total of 2,881 Part D plans will participate in this model, including 324 PDPs and 2,557 MA-PDs. While this model will continue in 2023, beneficiaries will not need to enroll in one of the model-participating plans to benefit from the $35 monthly copay cap for insulin. Under the new Inflation Reduction Act requirement, all Part D plans do not have to cover all insulin products at the $35 monthly copayment amount, only those insulin products that are covered on a plans formulary.

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Can I Get A Medicare Advantage Plan Instead

Yes. Medicare Advantage plans are private, Medicare-approved plans that combine Part A and Part B and typically include other benefits like a prescription drug plan.

You may choose to enroll in a Medicare Advantage plan during your Initial Enrolment Period or you can make the switch during the Medicare Advantage Open Enrolment Period that runs from January 1 to March 31 of every year.

Youll want to shop around for a Medicare Advantage plan because they can vary in what they cover, how much they cost, and so on. The Part A and Part B aspects of these plans will be the same, but its the other extra benefits like prescription drugs that can set one plan apart from another.

D Late Enrollment Penalty

The late enrollment penalty is an amount that’s permanently added to your Medicare drug coverage premium. You may have to pay a late enrollment penalty if at any time after your Initial Enrollment Period is over, there’s a period of 63 or more days in a row when you don’t have Medicare drug coverage or other

. Youll generally have to pay the penalty for as long as you have Medicare drug coverage.

, you don’t pay the late enrollment penalty.

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Introduction To Medicare Part D

This section constitutes an introduction to Part D. For more detailed information on any of the topics in this section, please click on the links within the topics. There, you will also find relevant legislative, statutory and CFR citation.

Prior to 2006, Medicare paid for some drugs administered during a hospital admission , or a doctors office . Medicare did not cover outpatient prescription drugs until January 1, 2006, when it implemented the Medicare Part D prescription drug benefit, authorized by Congress under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. This Act is generally known as the MMA.

The Part D drug benefit helps Medicare beneficiaries to pay for outpatient prescription drugs purchased at retail, mail order, home infusion, and long-term care pharmacies.

Unlike Parts A and B, which are administered by Medicare itself, Part D is privatized. That is, Medicare contracts with private companies that are authorized to sell Part D insurance coverage. These companies are both regulated and subsidized by Medicare, pursuant to one-year, annually renewable contracts. In order to have Part D coverage, beneficiaries must purchase a policy offered by one of these companies.

The costs associated with Medicare Part D include a monthly premium, an annual deductible , co-payments and co-insurance for specific drugs, a gap in coverage called the Donut Hole, and catastrophic coverage once a threshold amount has been met.

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