When you choose a Medicare health plan, you may also need to choose prescription drug coverage if you have health conditions that require you to take medication. Before choosing your plan, it will help to understand how this coverage works.

If you're a beneficiary with Part A or Part B Medicare policy, then you are eligible to sign up for Part D no matter your income. There are no physical exams required to sign up for drug coverage and you cannot be denied if you're an individual that has several prescriptions or a pre-existing health condition. Even if you aren't on any medications, it may benefit you to enroll now while you're eligible to ensure the lowest premium than to wait until you need it.

You may have questions about a monthly premium for Part D; however, there isn't one. The amount you pay each month depends on the drug plan that you choose. Some have a set premium while others don't charge extra for drug coverage.

Obtaining prescription drug coverage
Medicare beneficiaries who want drug coverage and get through one of two ways:

  • A stand-alone plan will give you solely drug coverage. This is a plan you should choose if you have other health benefits outside of Medicare.
  • A Medicare Advantage plan will cover your medical services as well as prescription drugs. You'll want to opt for this if Medicare provides all of your health benefits.

If you choose the standard drug benefits, then you'll pay your monthly premium, an annual deductible and a share of the cost of each prescription. With a Part D policy, after you reach your out-of-pocket maximum you will be required to pay no more than 5 percent of your drug costs. This is also known as the "catastrophic period" and continues through the end of the calendar year.

How Part D works with other types of Medicare policies
You may have a Medigap policy, a plan that supplements existing Medicare coverage. If you have Medigap, you may find it beneficial to purchase a Medicare Part D plan because the supplemental insurance may not cover any drug costs you incur. These policies cannot be sold with Part D coverage so beneficiaries must purchase them separately.

Individuals who have Supplement Security Income Benefits and receive assistance from a state Medicaid program do not pay for Medicare premiums. However, since most drug costs aren't covered by traditional Medicare plans individuals should purchase a Part D policy. If you are unable to enroll, Medicare automatically enrolls you in a plan.