If you have drug coverage from a current or former employer or a union, whether you should enroll in the Medicare drug benefit depends on

  • the quality of your employer coverage;
  • whether or not your employer coverage works with the Medicare drug benefit (it often will not).

If you have coverage that is as good as or better than Medicare’s drug benefit (creditable) and you like, you can keep it. You will not pay a penalty to join a Medicare private drug plan later as long as you have not been without your creditable coverage for more than 63 days. Find out from your employer whether your coverage is as good as Medicare’s drug benefit.

You should get a notice from your employer every year letting you know how your employer benefits are changing, whether or not your drug coverage is creditable, and if enrolling in a Part D plan would affect your current coverage (for both you and your family members who receive that coverage). If your coverage is not as good as Medicare’s, you might want to consider the Medicare drug benefit. You may have to pay a penalty if you enroll after you are first eligible. If you are not notified about whether your drug coverage is creditable, ask the company that provides your insurance for this information in writing. You will not have to pay a penalty if you can show that you received inadequate information about whether your drug coverage was creditable.

However, whether or not you can have Medicare drug coverage in addition to your employer coverage depends on your employer plan. If you want to keep your employer benefits, and are considering joining a Medicare drug plan, make sure you ask your employer if you can have both types of coverage. Many employer plans do not work with the drug benefit. You could lose all your employer benefits (both health and drug) if you join a Medicare private drug plan. It is also important to keep this in mind, if your employer plan covers your spouse or dependents who are not eligible for Medicare. When you lose your employer benefits, you usually cannot get them back.

The notice of creditable coverage that you should receive from your employer every year will let you know whether you would be able to get your coverage back if you disenroll from your Part D plan, if enrolling in a Part D plan would cause you to lose your employer coverage.

If you later decide you want to drop your employer coverage and get the Medicare drug benefit, you will get a Special Enrollment Period (SEP) to switch to a Medicare private drug plan. This SEP will generally be whenever your employer normally allows you to make changes to your health benefits.