People with prescription drug coverage through a former or current employer or union
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People who are covered by a current employer or union, or a retiree plan and are about to become eligible for Medicare should receive a notice from their company stating that their benefits are changing and what their options are with regards to Medicare Part D.
Employers have several options to continue providing drug benefits for retirees with Medicare. Your retiree plan may not want you to enroll in Medicare Prescription Drug Coverage. If you are about to become eligible for Medicare and you have not yet received a notice or did not understand the notice you received, call your former employer or the company that processes your claims to find out whether you should enroll in Medicare Prescription Drug Coverage.
If your coverage is as good as Medicare's:
If your or your spouse's employer or union has determined that your current drug coverage is at least as good as the Medicare standard drug coverage (“creditable coverage”), you can keep the coverage you have as long as it is still offered.
If at any point in the future you decide to switch from your current drug coverage to the Medicare coverage, you will be able to do so without paying a penalty.
If at some point in the future your employer or union stops offering prescription drug coverage, you will be able to join a Medicare drug plan without penaltyas long as you join that plan within 63 days after your current coverage ends.
Note: Keep any letter or notice from your employer or union stating that your prescription drug coverage is creditable to use for documentation purposes if you apply for Part D drug coverage at a later time.
If your coverage is NOT as good as Medicare's:
If you are newly eligible for Medicare and your employer or union has determined that your current prescription drug coverage is not at least as good as the standard Medicare drug coverage, and you want to join a Medicare drug plan, you must join during your initial enrollment period. This period is 3 months prior to the month you become eligible for Medicare, your month of eligibility, and 3 months after the month you become eligible in order to avoid paying a penalty. This initial enrollment period is the same as the initial enrollment period for Part B.
If you were on Medicare before February 2006 and your employer or union determined that your drug coverage was not as good as Medicare’s and you did not sign up for a Medicare drug plan during the Part D initial enrollment period (November 15, 2005 – May 15, 2006), you can sign up for a plan during the annual election period (November 15 – December 31 of each year). You may need to pay a penalty.
Caution: If you drop your employer or union coverage, you may not be able to get it back. You also may not be able to drop the drug coverage you have now without dropping all of your health coverage.
Talk to your benefits administrator. If your benefits are not as good as Medicare's prescription benefits, some of your options might be:
- Keep your current drug plan and join a Medicare drug plan to give you more complete drug coverage.
- Keep your current employer or union drug plan without the Medicare drug benefit (but you will have to pay a penalty if you join a Medicare plan after your initial enrollment period).
- Drop your current coverage and return to the Original Medicare Plan and join a Medicare prescription drug plan.
- Drop your current coverage and join a Medicare Advantage plan or other Medicare Health plan that covers prescription drugs.
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Page updated April 23, 2008
