Alternatives to Medicare Part D

Part D is not the only way to get prescription drug coverage when you are a senior citizen or have a disability. There are some options you can use instead of a Part D plan and others you can use in addition to a Part D plan to get the coverage you need.

You have a decision to make. If you are eligible for Part D, should you apply for it? If you do, will you also want another prescription drug plan in place? Keep in mind that you cannot use manufacturer drug coupons for medications you purchase through a federal healthcare program like Medicare or Medicaid, but you can use them with other types of insurance. Having more than one health plan means more costs to you but may be worth it.

And if you are not eligible for Part D, what are your options? Don’t worry. You may be able to gain prescription drug coverage through one of the following programs if you qualify:

• Employer-Sponsored Health Plans
• Federal Employee Health Benefits (FEHB)
• Health Insurance Marketplace Plans
• Indian Health Services
• Medicaid
• Program for All-Inclusive Care for the Elderly (PACE)
• TRICARE and Veterans Benefits

Employer-Sponsored Health Plans

Many people continue to work after they become eligible for Medicare at 65 years old. After all, the Social Security retirement age is 67 years old. Collecting benefits sooner than retirement age will mean smaller checks and that means less Social Security income in the long run.

This is one reason why many people stay on their employer-sponsored health plans later. They may feel their employer-sponsored plan is better than Medicare or they may believe they do not have to sign up for Medicare until they lose their current health coverage.

Missing Medicare's initial enrollment period could cost you, literally. You can only sign up later if the company you work for hires at least 20 full-time employees or its equivalent. This special enrollment period lasts eight months from the time you leave your job or lose your health coverage, whichever happens first. If you miss these enrollment periods, you will be charged a late penalty.

Part D late penalties depend on creditable coverage. This means that the employer-sponsored health plan you have is as good as a standard Part D plan and meets certain qualifying criteria.

The big question is whether or not you should keep your employer-sponsored plan and apply for Part D at the same time. The answer is not so straightforward. It could be beneficial to have additional prescription drug coverage since some medications are excluded from Part D coverage. However, each employer-sponsored plan has its own rules and some could drop you from prescription drug coverage once they know you have Part D. If you have a family that relies on coverage through your employer-sponsored health plan, they would also lose those benefits.

You will need to reach out to your health plan to find out their policy. Only then can you make an educated decision.

Federal Employee Health Benefits (FEHB)

You may be given access to discounted health plans as a federal employee thanks to the Federal Employee Health Benefits (FEHB) Program. Those benefits are available while you are employed and after you retire. To qualify for those benefits upon retirement, you need to have been receiving FEHB while you were working, for a minimum of five years. You will also need to be eligible for retirement annuities.

FEHB prescription drug coverage is creditable if you ever choose to sign up for a Part D plan.

Health Insurance Marketplace Plans

If you are not eligible for Medicare, you can apply for a Health Insurance Marketplace plan to get the health coverage you need. The situation changes if you are eligible for Medicare. It will depend on whether you choose to sign up for Medicare or not.

Once you have signed up for Medicare, it is illegal for someone to sell you an Marketplace plan. Like most things that are government run, however, there is an exception. If you did not meet criteria to get Part A premiums for free (you or your spouse did not work 40 quarters in Medicare-taxed employment), you can choose to disenroll from Medicare and sign up for an Marketplace plan. You cannot be on both plans at the same time.

You can choose a Marketplace plan but be careful. If you need Medicare down the road, you are likely to face late penalties depending on when you sign up.

The Marketplace offers a variety of plans. Not all will have creditable drug coverage. Keep this in mind if you think you might consider Medicare in the future.

Indian Health Service (IHS)

The Department of Health and Human Services offers health coverage for Indians of federally recognized tribes, Canadian and Mexican Indians recognized as part of the American Indian community and non-Indian pregnant women with an Indian child through their pregnancy and up to six weeks post partum. Health care through the Indian Health Service (IHS) is offered at designated IHS facilities and tribal facilities.

Care received at other facilities will not necessarily be covered. For this reason, you may want to consider additional health coverage options, especially for use when you travel and do not have access to these facilities.

IHS prescription drug coverage is creditable if you ever choose to sign up for a Part D plan.

Medicaid

Medicaid, like Medicare, is regulated by the Centers for Medicaid and Medicaid Services (CMS). The former program is aimed to cover the elderly and disabled, the latter those who are poor. Millions of people are eligible for both programs every year. When this happens, Medicaid requires you to sign up for a Part D plan.

There will be times when you may be eligible for Medicaid but not Medicare. It could be that you are in the 24 month Social Security Disability Insurance waiting period for Medicare benefits or that you do not qualify for Medicare at all. While only on Medicaid, Medicaid will pay for your drug coverage.

Program for All-Inclusive Care for the Elderly (PACE)

You are eligible for the Program for All-Inclusive Care for the Elderly (PACE) if you are 55 years or older and have a medical condition that your state says could require nursing home care. The goal of PACE is to keep you living in the community as long as possible by offering you essential health services. Only seven percent of PACE recipients actually live in nursing homes.

The program is available in 36 states but is not yet offered in Alaska, Arizona, Georgia, Hawaii, Idaho, Indiana, Kentucky, Maine, Mississippi, Nevada, New Hampshire, South Dakota, Utah, Washington D.C. or West Virginia. You may want to consider a PACE application if you meet criteria.

PACE prescription drug coverage is creditable so if you ever become eligible for Medicare, you will not need to be concerned about Part D late penalties.

TRICARE and Veterans Benefits

The Veterans Administration offers health benefits to those who completed active military service and were not dishonorably discharged. TRICARE insurance is offered to active and retired members of the uniformed services, active and retired members of the National Guard and Reserves, their survivors and their families.

Both TRICARE and Veterans Benefits have creditable drug plans should you ever choose to enroll in a Part D plan.