When you become Medicare eligible, you’re supposed to obtain Part D prescription drug coverage to avoid the Part D Late Enrollment Penalty. But that doesn’t mean you necessarily need to get Part D coverage at age 65. You might have “creditable” drug coverage through another source that meets or exceeds Medicare’s Part D drug minimum coverage standards.
Here is a list of CREDITABLE prescription drug coverage:
A stand-alone Medicare Part D prescription drug plan
A Medicare Advantage plan that includes Part D prescription drug coverage
Employer group health coverage that includes creditable prescription drug coverage (confirm with your HR department, as not all employer plans have creditable drug coverage)
The Department of Veterans Affairs (VA)
TRICARE
Indian Health Service
The clock starts on this during your Initial Enrollment Period (the 7-month time frame surrounding your eligibility month). Make sure you have one of the above, so you can avoid the late enrollment penalty.
And if you’re about to lose your employer-based health plan that has creditable drug coverage, make sure to go no more than 63 days without getting a Part D drug plan or Medicare Advantage plan that includes Part D.
Creditable prescription drug coverage is drug coverage that meets or exceeds Medicare Part D minimum standards.
what about prescription drug coverage through your employer? Is it creditable?
Well, that depends. Each group health plan needs to confirm whether the drug coverage is creditable or non-creditable each year from the insurance carrier. Some plans are creditable, and some are non-creditable. Your employer is required to communicate this to you at least annually when the group renews health coverage, and at your request.
NOTE: This notice only pertains to prescription drug benefits. It’s commonly confused with a separate notice provided by employers stating you had creditable “medical” coverage through the employer group health plan. The medical benefits are not in question here, just the prescription drug side.
If your group health plan’s drug benefits are creditable, you can delay Part D enrollment (without penalty) and obtain a Part D prescription drug plan when you need it (i.e. within 63 days after you lose the group coverage in the future).
If your group health plan’s drug benefits are non-creditable, you need to purchase a Part D prescription drug plan during your Initial Enrollment Period to avoid the penalty. If you don’t purchase a Part D prescription drug plan during your Initial Enrollment Period, the penalty will start to accumulate. The penalty is assessed and charged only after you actually enroll in a stand-alone Part D plan (or Medicare Advantage plan with Part D benefits). The penalty is calculated based on the number of months you are late enrolling in Part D.
Reference THIS LINK to confirm your penalty calculation for the current year. The penalty is assessed monthly, and also for life!
The big lesson here is you need to either pick up a Part D prescription drug plan when you’re first eligible, or get 100% confirmation that your other prescription drug benefits are creditable. Otherwise, you might begin to accumulate a life-time penalty.
Our next blog post will describe How to Remove a Part D Late Enrollment Penalty when it’s incorrectly being charged in the first place.
Reference Links
www.medicare.gov
Part D Late Enrollment Penalty
3 Ways to Avoid the Part D Late Enrollment Penalty
Neither Medicare Mindset LLC nor its agents are connected with the Federal Medicare program
