Look for ‘credible coverage’ in drug plan

Look for 'credible coverage' in drug plan
Individuals should study their options about Medicare Part D drug plans, a South Dakota State University specialist said.

Insurance companies and other private companies are working with Medicare to offer Medicare Part D drug plans. All plans offering coverage that is at least as good as Medicare's qualify as "credible coverage."

"A person with credible coverage might want to wait to sign up for Medicare Part D," SDSU Extension Family Resource Management Specialist Liz Gorham said. "They pay no late penalty to sign up after May 15, 2006, if they now hold credible coverage."

Veterans on TriCare and some other veterans' prescription drug plans have better coverage than that offered by Medicare Part D. A former employer may provide retirees with credible coverage that would be good for a period of time after retirement. A few Medigap pre-standardized plans also qualify for credible coverage.

"Usually once you terminate coverage, you cannot reverse the process," Gorham cautioned. "Be sure that you have studied your decision before making a change in health and prescription drug insurance coverage."

May 15, 2006 is the last time persons with Medicare, who do not already have credible coverage, can sign up for Medicare prescription drug insurance without paying a penalty of 1 percent per month of the cost of the national average premium ($32.86).

Each year, from Nov. 15 to Dec. 31, persons with Medicare Part D insurance will be able to change plans to include new drugs not covered under their current drug plan.

"File away any letter you might have received that states that your current prescription drug insurance offers credible coverage," Gorham advised. "If, at a later date, you are dropped from this coverage, the letter will serve as proof that you had credible coverage. As long as you enroll in a Medicare prescription drug insurance plan of your choice during the next open enrollment period, you will not be assessed a late enrollment penalty."

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