Medicare Drug Coverage Center:Frequently Asked Questions about Enrollment
1. When does the Medicare drug benefit begin?
The Medicare drug benefit begins on January 1, 2006.
2. Who's eligible for the new benefit?
Anyone who receives benefits under Medicare Part A (Medicare's hospital insurance) or is enrolled in Medicare Part B (Medicare's physician and outpatient medical insurance) is eligible for the new Medicare drug benefit, which is called Medicare Part D.
3. Do I have to sign up?
No. Enrollment in the Medicare prescription drug benefit is voluntary. However, there is a late enrollment penalty if you don't sign up by May 15, 2006.
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4. What's the late enrollment penalty?
For most people, here's what happens if you delay enrolling in the drug benefit: You will have to pay a late enrollment penalty that will grow larger with each month that you are not enrolled (or don't have other drug coverage that's considered to be as good as Medicare's). The penalty starts adding up if you go more than 63 days without drug coverage that's at least as good as Medicare's. In 2006, the penalty doesn't start adding up until after Medicare's open enrollment period, which ends on May 15, 2006. Note: This penalty will equal one percent of the average national monthly premium for each month that you are eligible for Medicare drug coverage but aren't enrolled or don't have drug coverage that's considered to be as good as Medicare drug coverage.
In most cases, you can only enroll in a drug plan during the open enrollment period, which runs from November 15, 2005 to May 15, 2006 for the first year and from November 15 to December 31 for every year thereafter. So if you delay enrolling, you might incur several month's worth of penalties. And these penalties do not go away if you enroll.
Even if you aren't enrolled in a Medicare plan, you can avoid late enrollment penalties if you maintain drug coverage that is considered comparable to Medicare drug coverage (see question 7). Also, the penalty is less for people who are eligible for low-income help. During 2006, Medicare will not be collecting late enrollment penalties from beneficiaries who enroll after May 15, 2006, if they also have the low-income subsidy (“extra help”).
5. When can I sign up?
There is a six-month initial enrollment period that is scheduled to start on November 15, 2005 and run to May 15, 2006. In later years, the annual enrollment periods will run from November 15 to December 31.
6. How can I sign up?
To receive the Medicare drug benefit, you will have to be enrolled in a Medicare-approved plan that offers drug coverage. This can be a plan that offers only drug coverage, known as a Medicare Prescription Drug Plan (PDP), or a Medicare HMO, PPO, or other Medicare participating plan that provides drug coverage. Medicare managed care plans are now called Medicare Advantage Plans.
Medicare plans that provide drug coverage will be available in every area of the country. You'll have to pick from the ones that serve the area you live in. You can only be enrolled in one plan at a time, and you will have to enroll directly in that plan. Plans will have mail-in application forms, and some may allow online enrollment as well. Enrollment in the drug benefit is automatic for people with both Medicare and Medicaid. It is also automatic for individuals who get help from Medicaid in paying for some of their Medicare costs, such as help paying for premiums.
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7. How will I know if I have coverage that's good enough to keep me from paying a late penalty?
If you currently have drug coverage through an employment-related retiree plan, that plan should notify you before October 2005 and let you know if the coverage it provides will be considered comparable to Medicare's ("creditable"). If the coverage is comparable, you will not have to pay a late penalty. If you don't hear from the retiree plan you're in, you should call the plan administrator and check.
The following are sources of drug coverage that might be considered equal to Medicare's—but you should check with the plan to make sure.
- State Pharmacy Assistance Programs (SPAPs);
- The VA;
- Group health plans (including church plans);
- Federal and non-federal employment-related plans;
- Tri-Care;
- Coverage through the Indian Health Service;
- Individual health insurance;
- State high-risk pools; and
- Coverage through PACE organizations.
8. I'm in traditional Medicare—can I keep that and also have the drug benefit?
Yes. If you are in traditional fee-for-service Medicare right now and want to keep that, you can and still get the drug benefit. You will have to enroll in a Medicare Prescription Drug Plan (PDP)—that's one of the private companies approved by Medicare that will be providing drug benefits only and no other Medicare services.
9. I'm in a Medicare HMO—can I stay in that plan and also have the drug benefit?
Yes, as long at the plan continues to participate in Medicare, you can stay in that plan and have Medicare drug coverage, but you have to get your drug coverage through that plan. You cannot be in a Medicare Advantage Plan—HMO or PPO—that's offering drug coverage and also enroll in a Medicare prescription drug plan.
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10. Will there definitely be a plan in my area?
Yes. There will be at least two plans available in every region of the country.
11. What if my plan leaves the Medicare program?
If that happens, you'll have an opportunity to enroll in another plan in your area under "special enrollment." In this situation, you won't have to wait until the next general enrollment period, and you won't incur any late penalties if you enroll in another plan within 63 days of the time your plan stops covering you.
12. Can a plan turn me down?
Plans cannot turn down (refuse coverage for) people who are eligible for the drug benefit and who live in the plan's service area (you can only be in a plan that operates in the area you live in). Plans can disenroll individuals only in select circumstances. For example, plans can disenroll individuals who don't pay the plan's monthly premium. In all cases, a plan has to give notice before disenrolling someone and must provide the individual with an opportunity to resolve the issue before he or she is disenrolled.
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13. Can I change plans?
Except in the special circumstances outlined below, you can only change Medicare drug plans once a year, and only during the annual plan enrollment period (November 15 to December 31). Exceptions are as follows:
- If there was a mistake in processing your enrollment;
- If the plan you enrolled in leaves the Medicare program or stops serving your area;
- If you move out of the plan's service area; or
- If you disenroll from a Medicare managed care plan that is providing your drug coverage.
In these cases, you can enroll in a new plan during a "special enrollment period," and as long as you don't go more than 63 days without drug coverage, you will not have a late enrollment penalty.
Individuals who are eligible for both Medicare and Medicaid can change plans at any time during the year.
14. Do I have to reenroll every year?
No. You'll automatically be enrolled in the same plan at the end of each year unless you disenroll during the annual enrollment period, enroll in another plan, or move out of the plan's operating area.
15. I split my time between two different addresses—will I have drug coverage all year?
You can change plans when you change residences, but it might be easier if you can find a plan that operates in both areas you live in. You should contact the plans available in your area and see if any serve all of the places you'll be living in and if any will let you access the drug benefit in all of the places where you live during the year.
16. How much will I have to pay to enroll?
Most people in Medicare will have to pay a monthly premium to enroll in the drug benefit. Those who receive the low-income subsidy (“extra help”) will not have to pay a premium unless they select a plan with a higher-than-average premium. Premiums will be set by the drug plans and can vary from plan to plan. For 2006, the average monthly premium is $32—that's $384 a year. Actual premiums for plans in your area will vary.
Remember, this is an individual benefit. If you're married, both you and your spouse will have to sign up, and you'll each have to pay the plan premium.
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