Medicare Prescription Insurance

When can I sign up for a Prescription Drug Insurance Plan?

You can sign up when you are eligible for Medicare and during the AEP (Annual Election Period) which is October 15 through December 7. You may also sign up under select exceptions such as moving to a different state and your old plan doesn’t cover you there. You cannot disenroll until the next AEP.

I do not use any prescriptions or only inexpensive generic prescriptions; why sign up?

You are not required to sign up. However, if you do not sign up when eligible then you turn on the penalty clock. If you decide later you need the plan, then you will be required to pay a penalty of 1% per month for every month you were not signed up. This 1% times the number months is multiplied times the average cost of all the plans available for that year. If the average cost is $35 and a person waited 5 years to sign up, the penalty would be $21.00 ($35 x 60 x 1%) per month added to the premium of the plan chosen. You never know when your prescription needs will change and they could be quite expensive. I have customers with $1,000 a month prescriptions retail.

All the plans are pretty much the same, aren’t they?

No! Drug insurance plans come with different monthly premiums, with and without deductibles. The copays vary hugely and they all have separate formularies (lists of drugs categorized in price tiers). It is very important to review your needs carefully your first year and every year after during the AEP. The insurance plans change their premiums, copays, deductibles, drug formularies including drug tiers every year starting 1-1. They may cover a drug one year and not the next or a drug may be cheaper at one insurance company than at another. For example, for 2011, Lipitor is $2.00 per month at one company and $73 a month at another. It is very important to analyze your prescriptions availability and cost, especially on an annual basis with all available plans. You can do this yourself at the Medicare.gov website or get help from a knowledgeable agent.

I am going to sign up for a Medicare Advantage Insurance Plan and they have Prescription Drugs included, nothing to check, right?

Wrong. You still need to check the availability and cost of your drugs for the year. Medicare Advantage Insurance Plans come with and without drug coverage. You may save money by having separate insurance plans. You can calculate this yourself at the Medicare.gov website or get help from a knowledgeable agent.