Prescription Medicare Part D Coverage and Costs

Medicare Part D is a prescription drug coverage. Most people opt to enroll get it, because original Medicare (Parts A and B) does not cover most prescription drugs. You may enroll in a Medicare Part D prescription drug plan if you are eligible for Original Medicare (Parts A and B). In addition, you must live in a service area of a Part D plan (which is most areas). If you are instead opting to purchase a Medicare Advantage Plan (Part C), you can choose one that has Part D prescription drug plan as well. Note: This page explains Medicare Part D in easy terms. However, you may still have questions. If that’s the case, our licensed experts can answer them, free of charge. Simply call us at 888-316-1432 ext. 3 for a free consultation.

What Does Medicare Part D Prescription Drug Cover?

The biggest point consumers need to know about Medicare Part D is it is not static in what it covers. In other words, 2 different Medicare Part D plans from two different insurers may cover different types of drugs. Thus, you need to be aware of what you are taking, and what the Medicare Part D plan you are interested in covers. See each plan’s drug list (aka “Formulary”) for more info. Medicare Part D Prescription Drug Plans do not cover:
  • Drugs that are not on the specific plan’s drug list
  • Drugs that are covered under Part A or Part B (certain cancer drugs, etc.) 
  • Drugs that are excluded by Medicare

Medicare Part D Prescription Drug Plans Enrollment and Penalties

Ideally, you will enroll in Medicare Part D at the same time you enroll in Original Medicare (three months prior / three months following your age 65 month). If you do not sign up then, and wish to enroll in Medicare Part D later, there is a premium penalty of 1% for every month you delay enrollment after your enrollment period is over. This penalty is not enforced if you did not enroll because you had prescription drug coverage equal to or better than Part D from another insurer (this is called “creditable coverage”, and your insurer will let you know if their coverage is considered “creditable”.)

What do Medicare Part D plans cover?

Medicare Part D plans cover certain prescription drugs

The federal government sets guidelines for the specific types of drugs Part D plans must cover

Each Part D plan decides which specific drugs it will cover and what plan members will pay

When comparing Part D coverage, check each plan’s formulary (drug list) to make sure your drugs are included.

What Does Medicare Part D Cost?

While the insurance companies that offer Medicare Part D drug plans set their own prices, the cost of the plans is fairly consistent across different sellers. However, the costs of the various letter plans, in relation to each other, can vary quite a bit. Your individual insurance agent can give you a good idea regarding each plan’s cost (and our licensed agents can help you here as well – give us a call at 888-316-1432 ext. 3 for a free consultation.)

How Medicare Part D Cost Sharing Works

Medicare Part D has different levels of co-pays and cost sharing until you reach a defined yearly limit on out-of-pocket costs. The limit is $5,100 in 2019. After that, your plan pays most of the cost of your drugs for the rest of the year. Your co-pays and co-insurance, as well as the plan deductible, count as out-of-pocket costs. Premium payments do not. Part D cost-sharing stages are explained below. Note the “gap” that exists between “Initial Coverage” (which ends at $3,820) and the beginning of Catastrophic coverage (which begins at $5,100). This “gap” is the well-known “donut hole” and is shrinking. By 2020, when in this stage, members will pay only 25% of the cost for covered drugs (both brand name and generics) during the coverage gap stage.
Annual Deductable
  • You pay for your drugs until you reach the deductible amount set by your plan.
  • Not all part D plans have deductible.
  • If your plan does not have a deductible, your coverage starts with the first prescription you fill.
Initial Coverage
  • You pay a copay or coinsurance and the plan pays the rest.
  • You stay in this stage until your 2021 total drug costs reach $4,130
Coverage Gap (Donut Hole)
  • You pay:
    • 25% of the costs for the brand name drugs
    • 37% of the cost for generic drugs
  • You stay in this stage until your total 2021 out-of-pocket costs reach $6,550.
Catastrophic Coverage
  • You pay a small copay or coinsurance amount.
  • You stay in this stage for the rest of the plan year.

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