As you enter retirement, prescription drugs may often become one of your major expenses over time. As of 2020, around 46.5 million U.S. citizens benefited from Medicare Part D plans. Although Part D is optional, most people find enrollment necessary to help address prescription drugs’ costs.
But who is eligible for Medicare Part D? In this article, we will cover details about Medicare Part D eligibility, when you can enroll, and what options you have to get Part D coverage.
Who Is Medicare Part D Eligible?
As a general rule, Medicare Part D eligibility is tied to qualification for Original Medicare. As such, you qualify for Medicare Part D if:
- You are aged 65 or older and a U.S. citizen or permanent resident who has continuously resided in the U.S. for the last 5 years, making you eligible for Medicare Parts A and B.
- You are under 65 and have received Social Security disability payments for more than two years.
- You are diagnosed with ALS or end-stage renal disease:
- If you are diagnosed with amyotrophic lateral sclerosis (ALS), you are eligible once you get your first month’s disability payment.
- If you are diagnosed with end-stage renal disease (ESRD) or kidney failure, which requires you to have regular dialysis or a kidney transplant, Medicare coverage usually starts on the first day of the fourth month of your dialysis treatments.
However, having Medicare Part D eligibility does not automatically mean you are covered. You still need to pro-actively sign up and enroll in a Medicare Part D plan.
When Can You Enroll in Medicare Part D?
Once you reach Medicare Part D eligibility, you can join a plan that provides Medicare Part D coverage during one of the following enrollment periods:
- Part D Initial Enrollment Period (IEP): If you are turning 65, your IEP s the 7-month period that begins three months before the month you are eligible for Original Medicare and ends after three months. Therefore, if you turn 65 in May, your initial enrollment period is from February to August.
- Annual Enrollment Period (AEP): which runs from October 15 to December 7 each year. During this period, all Medicare beneficiaries can freely switch or enroll in different Medicare plans, including Medicare Part D
- Medicare Advantage Open Enrollment Period (MA-OEP): If you are enrolled in a Medicare Advantage plan on January 1 each year, you can also switch Medicare Part D plans during the MA-OEP, which falls between January 1 to March 31. This period is only for those enrolled in a Medicare Advantage plan at the beginning of the year. During this period, you are allowed to enroll in a different Medicare Advantage plan that has prescription drug coverage or drop your current Medicare Advantage plan, return to Original Medicare, and join a standalone Part D prescription drug plan.
- Special Enrollment Periods (SEP): as long as you have Medicare Part D eligibility, you may be able to enroll in or switch Medicare Part D coverage if you experience a special circumstance, such as losing employer coverage or changing residence.
Is There a Late Enrollment Penalty for Medicare Part D?
If you qualify for Medicare Part D Eligibility, you must sign up during your Part D initial enrollment period. Otherwise, a late enrollment penalty is added to your Medicare part D premium when you subsequently decide to enroll in a Part D prescription drug plan.
The main exception is if you have “creditable coverage,” which is usually due to your employer-paid plan. A plan that provides “creditable coverage” is a plan whose prescription drug coverage is equivalent, on average, to Medicare’s standard drug prescription coverage.
If you lose creditable coverage, like when you retire, you should enroll in a Medicare Part D plan within 63 days of losing creditable coverage. Otherwise, you will incur late enrollment penalty fees.
Some other exceptions wherein the penalty for Medicare part D is waived include:
- If you begin receiving the Part D Low-Income Subsidy (LIS), also known as “Extra Help,” which is the federal program that helps pay for some to most of the out-of-pocket costs of Medicare prescription drug coverage; or
- If you are relocating back to the U.S. after living overseas.
What Options Are Available to Enroll in Part D?
Once you are eligible for Medicare Part D, you have two options to get Part D coverage.
The first is to get a standalone Part D prescription drug plan (PDP). This option is available only if you decide to stay with Original Medicare. To enroll in a PDP, a minimum requirement is that you must be eligible to enroll in Medicare Part A (but not necessarily enrolled) or currently enrolled in Medicare Part B. You must also be in the plan’s service area.
The second option for getting Part D coverage is to enroll in Medicare Part C (also known as Medicare Advantage) plan that bundles Part D coverage (known as an “MA-PD” plan). The only prerequisite is that you must first be enrolled in both Medicare Part A and Part B to enroll in a Medicare Advantage plan.
Whichever option you choose, you can switch plans during the Annual Enrollment Period. You can move to another standalone PDP plan, upgrade from Original Medicare to an MA-PD plan, or switch MA-PD plans.
Whether you are purchasing a standalone PDP or enrolling in an MA-PD plan, it’s always important to make sure to check that your drugs are actually included within the plan’s formulary or list of “covered drugs.” Plans do not necessarily cover all kinds of drugs, and it could be a costly mistake to assume that your drugs are automatically covered.
If you already have Medicare Part D Eligibility, you should enroll in Part D to avoid late enrollment penalties, especially if you require long-term prescription drug maintenance. Plus, explore the latest Medicare Part D plans’ features to help you decide on a more suitable plan before the next annual enrollment period.