Do I Need a Medicare Prescription Drug Plan?

Medicare Part D — also known as Medicare drug coverage or Medicare prescription drug plans — helps cover the cost of prescription drugs. Part D plans are provided through private insurance companies, but are government-regulated and work with existing Medicare coverage.

One of the benefits of enrolling in Part D coverage is these plans may lower your drug costs while protecting against higher costs in the future. With a Part D plan, you’ll pay a monthly premium and predictable copayments or coinsurance for your medications, making it easier to budget for your healthcare costs. Remember, the specific benefits and costs associated with Medicare Part D can vary depending on the plan you choose. Always review the details of any plan before enrolling.

While Medicare Part D is optional, for the majority of Medicare beneficiaries, it is important to evaluate and enroll in a prescription drug plan during your Initial Enrollment Period. This is especially critical if you have chronic health conditions. According to a 2021 Kaiser Family Foundation study, 77 percent of all Medicare beneficiaries are enrolled in plans that provide a prescription drug plan*.

Do I need Medicare Part D?

There’s no mincing words: Most people will likely need Medicare Part D prescription drug coverage. Even if you’re in good health during your initial enrollment period, and may not be currently taking any medications, it’s important to guard against unexpected health conditions that may arise down the road by making sure you have prescription coverage. 

That being said, there are certain situations where you do not need a stand-alone prescription drug plan. 

When do I not need a Medicare Prescription Drug Plan?

• You’re enrolled in a Medicare Advantage policy that already includes Part D prescription drug coverage. This is also known as an MA-PD plan. In these cases, your drug coverage is rolled into your existing plan, meaning you do not need to shop for a separate plan. According to the same Kaiser Family Foundation study cited above, Medicare Advantage plans with prescription drug coverage are becoming more popular, meaning that enrollment in stand-alone prescription drug plans has decreased in recent years.
• You have existing creditable prescription drug coverage. This usually comes from a large employer, TRICARE, PACE or the VA. In these cases, as long as you maintain that coverage, you can postpone Medicare Part D enrollment without penalty.
• You’re in the end stage of a life-threatening disease. Because of Medicare hospice care, in these cases, Medicare Part A will cover medications related to that condition. However, for other medications, you’ll still need Part D coverage.

There are other avenues if you do not have a Medicare Part D plan, but these — such as financial assistance or alternate drug plans — do not have the same consistency and protections that come with federally regulated plans. 

If costs are a concern, programs such as Medicare Part D Extra Help assist with deductibles and copays for beneficiaries with limited income and resources. 

When can I enroll in or switch a Medicare Part D Plan?

There are only certain times where you can either enroll in or switch a Medicare Part D Plan.

The most common period for initial Part D enrollment is your Initial Enrollment Period. This is a seven-month window that begins on the first day of the month, three months before you turn 65, and lasts for three months after your birthday month. 

For instance, if your birthday is September 2, your initial enrollment period would begin on June 1 the year you turn 65, and end on December 31 of the same year. 

Another common period for enrolling in Part D coverage is the Open Enrollment Period. You may also see this referred to as the Annual Enrollment Period or the Annual Election Period. The Open Enrollment Period begins October 15 and ends on December 7. If you enroll in a plan during this time your coverage would go into effect January 1 of the following year. During this time, you can also enroll in and switch Part D or Medicare Advantage Plans, among other changes.

There’s also the Medicare Advantage Open Enrollment Period, which runs annually from January 1 to March 31. However, it’s important to note that this applies only if you have a Medicare Advantage plan. In this period, you can switch to another Medicare Advantage Plan with prescription drug coverage (MA-PD), or you can leave Medicare Advantage to return to original Medicare and purchase a stand-alone Part D plan. If you switch to a Medicare Advantage plan that does not include prescription drug coverage, you’ll have to ensure you have creditable coverage from another source (employer, TRICARE, etc.), because you cannot buy a separate Part D plan in that case.

Finally, there are a variety of Special Enrollment Periods where you can enroll in a Part D plan outside of the initial enrollment period. Common situations for these SEPs include:

• You’ve lost health care coverage from an employer or union.
• You lose creditable coverage. Every September, you should receive a notice to alert you if your coverage is still creditable. 
• You’ve moved out of your current plan’s service area.

In these cases, you usually have up to two months to switch to a new Part D or Medicare Advantage plan.

In addition, if you are enrolled in the Part D Extra Help program, you have quarterly enrollment periods during the first three quarters of the year. 

Key Takeaway

Whether it’s built-in to a Medicare Advantage plan or obtained as stand-alone coverage, Medicare Part D (prescription drug coverage) is an important part of your coverage to ensure you’re protected and covered for any current and future health conditions.

* Cubanski, J and Damico, A  (2021). Key Facts About Medicare Part D Enrollment, Premiums, and Cost Sharing in 2021, KFF https://www.kff.org/medicare/issue-brief/key-facts-about-medicare-part-d-enrollment-premiums-and-cost-sharing-in-2021