Medicare Prescription Drug Plans – PDP

If you have Medicare Part A or Medicare Part B, you can purchase a Prescription Drug Plan. There are no physical exams required. You cannot be denied coverage because of current or past health reasons. And your premium is not based on your medical conditions; past, present, or future.

Do You Need to Sign Up for Part D?

1. Current Coverage:
   • If you already have creditable prescription drug coverage (coverage that is at least as good as Medicare’s standard prescription drug coverage), you may not need to sign up for Part D.
   • Examples of creditable coverage include employer or union health plans, TRICARE, Veterans Affairs (VA) coverage, or other health insurance.
2. Medicare Advantage Plan (Part C):
   • If you have a Medicare Advantage Plan that includes prescription drug coverage, you do not need to sign up for a separate Part D plan.

If you do not sign up for Medicare Part D when you are first eligible and do not have other creditable prescription drug coverage, you may incur a late enrollment penalty. Here’s how it works:

Initial Enrollment Period (IEP):

• The IEP is the seven-month period that begins three months before the month you turn 65, includes your birth month, and ends three months after your birth month.

Late Enrollment Penalty:

• If you go without creditable prescription drug coverage for 63 consecutive days or more after your Initial Enrollment Period is over, you may have to pay a late enrollment penalty if you decide to enroll in Part D later.
• The penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($34.70 in 2024) by the number of full, uncovered months you were eligible but didn’t join a Part D plan and didn’t have creditable coverage. This amount is added to your monthly Part D premium.

Example of Late Enrollment Penalty

A late enrollment penalty depends on how long you have gone without creditable prescription drug Part D coverage.

Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($34.70 in 2024) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly penalty is rounded to the nearest $.10 and added to your monthly Part D premium. The national base beneficiary premium may increase or decrease each year, so your penalty amount may also increase or decrease each year.

Summary

• Sign Up: Consider signing up for Part D if you don’t have other creditable prescription drug coverage to avoid a late enrollment penalty.
• Evaluate Coverage: Check if your current health coverage qualifies as creditable prescription drug coverage.
• Be Aware of Penalties: Understand that failing to sign up for Part D when first eligible, without having other creditable coverage, can lead to a lifelong late enrollment penalty.

What if I don’t take any prescription drugs right now?

It still may be a good idea to purchase a PDP even if you get the lowest cost package available and hold on to it. You really never know when you suddenly may need to start taking prescription drugs.

What can I expect for a premium?

Each plan sets its own premiums for each calendar year. This is why it is wise to find an experienced insurance broker that can help you find a plan that most suits your needs.

Can my income affect how much I’ll pay?

Yes! It very well could. Prescription Drug Plan members who make over a certain amount of income each year are charged an Income Related Monthly Adjustment Amount (IRMAA) on top of their plan premiums. You only are only required to pay this adjusted amount if your modified adjusted gross income (MAGI) from your latest tax return, is more than $103,000 (for an individual) or $206,000 (for a couple filing joint tax returns).

Income-Related Monthly Adjustment Amount (IRMAA)

If your income exceeds certain limits, you may have to pay an additional premium, known as the Income-Related Monthly Adjustment Amount (IRMAA), on top of your plan’s premium. For 2024, the income thresholds and corresponding IRMAA amounts are as follows:

How do I get a Medicare Prescription Drug Plan coverage?

You must enroll with one of the private insurers that offer PDP or Medicare Advantage plans that includes prescription drugs. There are several different enrollment methods such as finding a local insurance broker that has the experience to evaluate your specific needs. This alone could save you hundreds if not thousands of dollars each year.