If you are eligible for Medicare but have opted to continue your health and prescription drug coverage from another source, such as an employer or union plan, you may wonder if you need a Part D plan.
First, you must be enrolled in either Part A and/or Part B to be eligible to purchase a Medicare Part D Prescription Drug Plan. Most people enroll in premium-free Part A when they turn 65, but if you have declined both Part A and Part B, you cannot enroll in Part D.
If you are eligible for Part D, there are a few things to consider before enrolling in a plan:
- Will you lose your current prescription drug coverage if you enroll in Medicare Part D? If so, will that affect your spouse or dependent children covered under the plan?
- Is your current prescription drug coverage “creditable?” In other words, is it as good as or better than Part D? If so, it’s up to you whether or not to switch. If it isn’t creditable, you’ll need to enroll in Part D or face a late enrollment penalty with your monthly premium when you do eventually sign up.
Here’s a look at a few specific coverage situations and Medicare Part D.
Part D and employer group coverage
Your employer should let you know if your prescription drug coverage changes when you become eligible for Medicare. Depending on the employer, you may be able to continue your existing coverage, or your coverage may be dropped. Some employers offer a Medicare Part D drug plan to employees eligible for Medicare.
Part D and COBRA
Even if you are eligible to continue your employer’s coverage through COBRA, it may be to your advantage to take Part B and/or Part D. If you do elect to continue coverage with COBRA, you’ll still be able to avoid a late penalty when you do enroll in Part D if your COBRA plan has creditable prescription drug coverage.
Part D and Marketplace plans
If you have an individual plan with prescription drug coverage, your insurer will let you know whether or not your coverage is considered “credible” for the purpose of Medicare. If it’s not, you’ll need to enroll in Part D as soon as you are eligible to avoid a penalty.
Part D and other government insurance benefits
If you are covered by the Federal Employee Health Benefits program (FEHB), TRICARE military benefits, or Veterans Affairs benefits, your prescription drug coverage is considered creditable, and you’ll be able to enroll in Medicare Part D if your coverage ends without paying a penalty. If you do decide to enroll in Medicare Part D while still covered by one of these plans, you won’t lose your coverage.
Note, however, that the VA doesn’t coordinate benefits with Part D plans. In other words, you can use one coverage or the other on individual prescriptions, but not both.
Part D and Medicaid
If you are dual eligible for both Medicare and Medicaid, you must enroll in a Part D prescription drug plan when you first become eligible. In fact, if you don’t enroll, Medicare will enroll you in a plan automatically, so you don’t lose prescription drug coverage. Most people who are dual eligible qualify for the “Extra Help” program to lower premiums for Part D.
Part D and Medigap
Some older Medigap plans include prescription drug coverage, but no plans currently sold cover prescription drugs. You’ll need a separate Part D Prescription Drug Plan unless you have creditable coverage from another source.
Part D and long-term care facilities
Most long-term care facilities use a pharmacy service that contracts with a specific Part D prescription drug plan or plans. If you’re moving into long-term care, you’ll be able to switch Part D plans to make sure the one you choose contracts with your facility’s pharmacy. You’ll have an opportunity to switch plans again when you move out.