What is Medicare Part D? A Baby Boomer’s Guide

Baby Boomer’s Guide to Medicare Part D

Medicare Part D is a federal program designed to provide self-administered prescription drugs to Medicare enrollees. This is an optional Medicare plan that 47 million U.S. citizens enrolled in during 2019. Considering the high cost of prescription medication, most baby boomers view drug coverage as a necessity.

This popular prescription plan was enacted as a key part of the Medicare Modernization Act of 2003. Practically speaking, Medicare Part D became viable as a working drug supplement to original Medicare on January 1, 2006. This program offers drug benefits covered by private insurance plans that are funded by both the government and enrollees.

While Part D plans usually pay the bulk of the bill for prescriptions filled by enrollees, the insurance companies rely heavily on third parties for financial assistance. It is noteworthy that Part D plans are reimbursed for a large portion of the cost by manufacturer and pharmacy rebates.

How do I Enroll in Medicare Part D?

There are two different ways to sign up for Part D prescription coverage. Boomers can choose a Part D drug plan that covers prescription drugs exclusively as a “stand-alone” drug plan that complements Part A and Part B Medicare coverage. The other option is to enroll in Medicare Advantage which includes drug coverage as part of its package.

Similar to signing up for original Medicare and Medicare Advantage plans, you enroll for Medicare Part D during the same time frame. You are eligible to enroll in Medicare Part D during your initial enrollment period (IEP). This period of time is the three months prior to your 65th birthday. It also includes your birthday month and the three months following your birthday which makes this a 7-month period to enroll.

There are also special enrollment periods (SEPs) established to meet the needs of people coping with unique circumstances. Below are the groups of people eligible to sign up for Medicare Part D during special enrollment periods.

Baby Boomers with Limited Income

People who need low-cost Part D Medicare can sign up any time of the year. When people enter or leave a nursing home, they are also eligible to sign up whenever that occurs without time restrictions based on enrollment periods.

Seniors Who Lose Drug Coverage from Other Sources

There are situations where Medicare recipients lose drug coverage from their employer, COBRA, the VA, unions, Medicaid and retiree benefits. When this happens, seniors are allowed to sign up within two months after the loss of coverage occurred.

Medicare Recipients Who Move Outside of their Current Plan’s Service Area

There are times when enrollees are forced to move outside of their drug plan’s area of service. When this happens, Medicare recipients can sign up with a new plan that services the area they moved to for a period of time up to two months after the move.

When Plan D Stops Providing Service to the Area

Medicare recipients can sign up with another plan when their current plan pulls out of their area and stops providing the services promised.

When Citizens Return to the U.S. after Living Overseas or Get Out of Prison

Citizens in these unusual situations can sign up for Medicare Part D within the two month period following their release from prison or return to the U.S.

When a Highly-rated Medicare Advantage Plan Becomes Available in the Area

In the event a five-star plan becomes available in your area, you can switch plans any time, except during the first week in December.

When a Plan Violates Its Contract

Should your plan not provide the drugs promised, then enrollees can report this to Medicare and ask for an investigation. If Medicare decides the plan has not honored the contract, then enrollees can switch plans at that time.

If a Mistake Is Made by a Federal Employee during Enrollment or Disenrollment in a Plan

If Medicare approves an enrollee’s claim that a mistake was made during enrollment or disenrollment, then the victim has two months to sign up again.

Another time period for enrollment that is open to baby boomers who aren’t covered by the special enrollment periods mentioned above is the Annual Open Enrollment Period. This timeframe begins on October 15th and lasts through December 7th. During this period, baby boomers are eligible to sign up for Part D for the first time. You can also replace your original Medicare with a Medicare Advantage plan, or switch Medicare Advantage plans.

Finally, there is another period for boomers to make needed enrollment changes. From January 1st to February 14th, Medicare recipients can opt out of a Medicare Advantage plan to sign up for a Part D drug plan.

What Does Medicare Part D Cost?

The costs paid by Medicare Part D enrollees are based on several factors.

Income is a major factor that determines the cost to enrollees. For 2021, if your income is less than $88,000 for a single person and less than $176,000 as a couple, then you won’t be charged a premium. They calculate earnings based on tax returns.

There are also deductibles and coinsurance costs associated with most plans. It is common for enrollees to be charged for brand-name medications. There are typically cost incentives to use generic brands. Every plan is different and should be carefully reviewed.

Takeaway

Medicare Part D provides drug coverage. Baby boomers must carefully review the different plans available to determine which plan is best for them. Prescription drugs are covered by both Medicare Part D and Medicare Advantage plans.

There is a penalty associated with late signups, so it is important to sign up as early as possible to avoid paying more than is necessary. While the period you can join is limited for most, there are special circumstances that Medicare accommodates by offering more flexible dates to sign up.

David Goldstein
David launched Boomer Buyer Guides with his wife Alice to provide Baby Boomers with trustworthy, well-researched information about products and services that Baby Boomers buy. Learn more about David Goldstein