Medicare has four parts: Part A (Hospital), Part B (Medical), Part C (Medicare Advantage) and Part D (Drugs). This article is going to focus on Part D.
A question I get asked frequently is, “Why would I need to pay a premium for a prescription plan if I don’t take any drugs? Can’t I add a prescription drug plan when I need it?” To which I reply, “I’ve never caused a car accident. Why should I pay for car insurance? Can’t I just add it if I get in a wreck?” Silly questions, right? Do you see where this is leading?
When you enter Medicare, it is important to have a prescription drug plan!
Two weeks ago, a client called me to tell me he let his PDP lapse. His first few years in Medicare he had no drugs so he could not see the reason for it. Fortunately, he did not let his Supplement lapse. You see, he now has cancer. He was hoping to add a prescription drug plan as he has been prescribed expensive medications. Unfortunately, he was not in a valid PDP enrollment period and will have to pay the full cost of his medications until the next qualifying enrollment period (about six months). OUCH! If that isn’t bad enough, once he does qualify for a prescription drug plan, he’ll have to pay a penalty for the remainder of his time on Medicare!
Medicare has specific rules as to when you can sign up for a prescription drug plan and as previously mentioned, there are penalties for those who delay adding a prescription drug plan. For now, let’s focus on when you can sign up.
There are four enrollment periods to sign up for a prescription drug plan:
- The first opportunity is when you turn 65. This is called an IEP or Initial Enrollment Period. If you enter Medicare at this time, you can choose any prescription plan to work with a supplement or a Medicare Advantage with prescription drug coverage included.
- A second opportunity is called a Special Enrollment Period or SEP. This is when you delay entering Medicare because you have creditable coverage through an employer plan. As with the IEP, you can choose any plan in your area. Warning: timing is critical, so don’t wait.
- A third option is called the Annual Enrollment Period or AEP. This is that time in the fall when you get tired of all the commercials and unsolicited mail. If you were one of those who did not apply during the IEP or the SEP, then you can sign up for a plan between October 15 and December 7 and your plan will start on January 1. If this is you, then you’ll have a penalty, which I’ll explain later.
- The final option is called the Open Enrollment Period or OEP. This is a limited option which is available from January 1st through March 31st. It is limited only to those who have a Medicare Advantage plan and wish to go back to Original Medicare (Parts A & B) and a Part D plan.
I know this can be confusing, but we can help. With two decades of experience, we can guide you through this process.
There is a lot to know when it comes to Medicare. Whether you are new to the subject or want to brush up on your knowledge, consider joining us for a Medicare 101 course. I am Medicare Certified through the National Association of Health Underwriters, so I can offer you best in class Medicare knowledge. I hope to see you soon!
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options. By contacting us via phone or emai, you are authorizing a licensed insurance agent to contact you.