Medicare Part D, your prescription drug plan, is one of the most confusing steps in signing up for Medicare.
Other than Medicare Advantage plans (which most people THINK they understand) the most confusing part of Medicare is the Medicare Part D prescription drug plan.
Do you need a drug plan? If so, which drug plan is best? How much will it cost? Am I required to buy a drug plan?
For starters, you are not REQUIRED to buy Medicare Part D, but you probably should . . . even if you are not currently on any medication.
If you fail to buy Medicare Part D when first eligible you will be charged a TAX by the U.S. Treassury and this tax is payable for life. Termed a late enrollment penalty (LEP) it is a tax surcharge equal to 1% per month for every month you couild have enrolled in a PDP (prescription drug plan) but failed to do so.
This tax is IN ADDITION TO the premium you pay to the insurance carrier offering the drug plan.
If you are 30 months late in signing up you pay a 30% penalty tax for the rest of your life. If you sign up 100 months late (a little over 8 years) you pay a 100% tax.
Covered drugs and their prices are determined by a drug formulary. As a general rule, plans with fewer drugs in their formulary are priced lower and the covered drugs come with much higher copays. Most of the lower priced drug plans also have a calendar year deductible before you can access copays.
Drug plans are elective and can be changed during your AEP (annual enrollment period) that usually runs from Oct through early December. You are not required to change plans every year but you should at least review them to see which plan is the best fit.
Most Medicare Advantage plans are classified as MAPD, which means they include a drug plan. The majority of the time when I review drug plans for my clients we find that the plan they have as part of their MAPD is totally inadequate for their needs.
The drug plans included in MAPD are usually entry level plans that cover few drugs and have higher than necessary drug copays.
Most people would be better served buying either a Medigap plan N and a separate drug plan or uncoupling the drug plan from the Advantage plan and making the drug plan a separate purchase.
I am happy to offer assistance in picking the right drug plan as a free service for my Medigap clients. I am not compensated in any way for PDP advice but my Medicare supplement clients can call any time they need to review their coverage.
Buying a drug plan is easy.
Buying the RIGHT drug plan is challenging.
Buying the WRONG Medicare Part D drug plan is easy but expensive.