Prescription drug plans (Medicare Part D)

In the month of your 65th birthday. That’s the good news. The bad news is that what you get from the government is not full coverage. It was never designed to be full coverage and never will be. The government offers Original Medicare, Part A and Part B: your guaranteed benefit. Your options are Part C and Part D.

Part A is inpatient insurance for your hospital care. For most of us there’s no cost to sign up, because it’s funded through payroll taxes. If you filed for Social Security benefits at age 62, you will be enrolled in Part A automatically in the month of your 65th birthday, and you’ll need to enroll in Part B. If your 65th birthday is within 90 days and you haven’t filed for Social Security benefits, you need to get cracking and apply for Part A, even if you plan to keep working past 65.

Part B is medical insurance. It pays for your doctor visits, lab tests and preventive care. You’ll pay a monthly premium for Part B, based on your annual income. Most people enroll in Part B as soon as they qualify; if you’re still working and have full coverage, your situation may be different. Important: if you don’t sign up for Part B when you’re first eligible (and don’t have coverage through an employer), you’ll pay a hefty late-enrollment penalty.

Medicare Part C, better known as Medicare Advantage, is a private health plan option (for example an HMO or PPO). The “advantage” is that plans must offer everything in Part A and Part B, and they may also include additional services, such as prescription drug coverage.

Part D is prescription drug coverage. It’s critical coverage, because Medicare Part B does not pay for outpatient prescriptions, and prescriptions are expensive. Here’s another gotcha: as with Part B, you will be penalized if you don’t join a Part D plan when you are first eligible.