Paying the Part D Deductible When Joining a Plan Midyear

Q. If I join a Part D drug plan partway through the year, do I still have to pay the annual deductible?

A. It depends on whether you’re joining a Part D drug plan for the first time or switching from one plan to another during the year, outside the normal annual enrollment period. It also depends on whether the plan in question charges an annual deductible; not all plans do.

If you’re enrolling in a Part D plan for the first time

If the plan you join has an annual deductible, you must meet it before your prescriptions can be covered, regardless of the time of year. The deductible is not prorated according to how many months have passed since the beginning of the year.

Example: The plan has a deductible of $295 (the maximum allowed by law in 2009) and your Part D coverage begins September 1. The full cost of your drugs is $120 a month, so during September and October you pay the whole pharmacy bill ($120 x 2 = $240). You meet your deductible halfway through November. Then coverage kicks in and you pay whatever share of the cost your plan requires. If you remain in this plan at the end of the year (or switch to another that also charges a deductible), you’ll again have to meet the following year’s deductible before coverage begins.

If you’re switching from one Part D plan to another

When you move to another state or into a nursing home—or are in a few other situations where you’re allowed to switch plans outside of the standard open enrollment period—the following rules apply:

• If your old plan had a deductible and you’ve met it, you are not required to pay a deductible under your new plan.

Example: Plan A has a deductible of $250, and your total drug costs so far this year come to $360, so you’ve met this deductible and are receiving coverage. When you join Plan B, which has a $295 deductible, you don’t pay this amount and your coverage starts immediately.

• If your old plan had no deductible, but the new one does, you must meet this deductible before receiving coverage. However, your previous drug costs are taken into account.

Example: Under Plan A, you paid no deductible and have so far this year received drugs worth $240 (the amount that you and your old plan have paid toward them). But Plan B has a deductible of $295. So you must pay a balance of $55 ($295 minus $240) toward Plan B’s deductible before coverage starts.

• If your old plan had a deductible that you haven’t yet met, and the new plan also has a deductible, you must pay the difference.

Example: Plan A had a deductible of $295, but your total drug costs so far this year amount to $160. Plan B has a lower deductible of $200. Because you haven’t yet met your deductible under Plan A, you must pay the difference under Plan B ($200 - $160 = $40) before your new coverage kicks in.

• If your old plan had a deductible that you haven’t met, but the new plan has no deductible, you pay nothing further.

Example: Plan A had a deductible of $295 and your total drug costs so far this year come to $185. Because Plan B does not charge a deductible, coverage under it starts immediately even though you didn’t meet the deductible under Plan A.

Patricia Barry is a senior editor at the AARP Bulletin.