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medicare part d plans

Medicare Part D Plans Comparison in 2022

In 2022, Medicare beneficiaries will have a number of options for their prescription drug coverage.  Some people will choose to enroll in a Medicare Advantage plan with drug coverage, while others may want to sign up for a stand-alone Part D policy. 

You should know that while Medicare drug plan enrollment is optional, you could have to pay late enrollment penalty fees should you fail to sign up when you are first eligible and want to enroll down the line (unless you had some other drug coverage that Medicare considers creditable). 

While researching Medicare prescription drug plans can seem like a complicated task, our Medicare Part D plans comparison can point you in the right direction when it comes to choosing your Medicare drug coverage.

How can you get your Medicare prescription drug coverage?

There are two main ways to get your Medicare prescription drug coverage. You can get coverage for your prescription medications through a stand-alone Part D prescription drug plan, or you can enroll in a Medicare Advantage plan that includes prescription drug coverage. Let’s start by looking at stand-alone Medicare Part D plans.

Medicare Prescription Drug Plans

If you are enrolled in Original Medicare and/or a Medicare Supplement plan, you can get your prescription drug coverage through a stand-alone Medicare prescription drug plan.

Coverage for prescription medications is not included under Original Medicare benefits. And Medicare Supplement Insurance plans don’t come with coverage for your prescription drug costs, so if you are enrolled in a Medigap plan and want help paying for your prescription drugs, you should be sure to enroll in a Part D policy.

Stand-alone prescription drug plans are sold through private insurance companies. These policies work by offering coverage for your prescription medications, including both brand-name prescription drugs and generic medications. Each Medicare Part D plan has a drug formulary, which is a list of the drugs covered by the plan.

A drug plan’s formulary divides medications into tiers. Though each insurance company can choose how it organizes its plans’ drug tiers, tiers are usually classified in the following way:

  • Tier 1: Preferred generic prescription medications
  • Tier 2: Non-preferred generic prescription medications 
  • Tier 3: Preferred, brand-name medications
  • Tier 4: Non-preferred, brand-name medications
  • Tier 5: Specialty tier, or very high-cost medication 

It’s very important to be aware of what drugs are covered in a plan’s formulary before enrolling to make sure that you are getting coverage for your medications. There are also drugs that fall into a protected class of medications, meaning that Part D plans must cover almost all of the drugs in these categories:

  • Antipsychotics
  • Antidepressants
  • Anticonvulsants
  • Immunosuppressants
  • Cancer drugs
  • HIV/AIDS drugs

At the end of the day, the best way to ensure that you are choosing the right Medicare drug plan for you is by contacting a licensed insurance agent who can walk you through the nuances of a plan’s coverage benefits.

Medicare Advantage Plan Drug Coverage

Medicare Advantage plans are another way to get your Medicare coverage. Oftentimes, these plans come with built-in drug coverage, but there are a few important considerations that you should be aware of when choosing a Medicare Advantage plan.

According to the Kaiser Family Foundation, 90% of Medicare Advantage plans offered drug coverage in 2020, and 89% of Medicare Advantage enrollees had plans that included prescription drug coverage.

However, you should pay close attention to a Medicare Advantage plans’ coverage details. For example, if you enroll in an HMO or PPO plan that doesn’t come with drug coverage, you are not allowed to enroll in a separate Part D drug plan. If you enroll in a PFFS plan without drug coverage, you are permitted to enroll in a stand-alone drug plan as well. And MSA plans do not offer drug coverage. However, all Special Needs Plans (SNPs) come with drug coverage.

As you can see, there are plenty of nuances that go into getting your drug coverage from a Medicare Advantage policy. Be sure to do your research and seek guidance from an experienced insurance agent before settling on a plan. 

How much does it cost to get coverage for your prescription drugs?

By now you’re probably wondering, so what is this all going to cost me? How much your Medicare drug coverage costs you depends on a number of factors.

First off, if you get your drug coverage from a Part D plan, you will have to pay a monthly premium. The average Part D premium in 2022 is $33, though how much you will have to pay depends on where you reside and what plan you choose to enroll in.

You may also have to pay a premium for your Medicare Advantage plan if that’s where you get your drug coverage. But in 2020, 60% of beneficiaries who got their drug coverage from a Medicare Advantage plan did not pay any additional premium on top of their Part B premium.

Plus, Medicare Part D plans have annual deductibles. In 2022, the maximum Part D annual deductible has been set at $480, though you can also find plans with lower (and even $0) deductibles. And after you reach your plan’s deductible, you will still be responsible for covering copay/coinsurance costs.

The Four Stages of Medicare Part D Coverage

To give you a better idea of how much you will have to pay for your prescription costs under a drug plan, we will quickly outline the four stages of Medicare Part D coverage: the deductible stage, the initial coverage stage, the coverage gap (donut hole) stage, and the catastrophic stage.

During the deductible stage, you are responsible for covering the costs of your prescription medications. After you reach your yearly deductible, you enter the initial coverage stage. At this point, you will just have to pay a copayment/coinsurance for your prescription drugs.

If you reach $4,430 in total drug costs in 2021, you will enter the coverage gap, or donut hole, stage. At this point, you are responsible for paying 25% of the cost of your generic and prescription drugs. Finally, if you reach the out-of-pocket threshold of $7,050 in 2022 (this includes monthly premiums, coinsurance/copays, and the manufacturer’s 70% cost) you enter the catastrophic coverage stage.

In this final stage, you only have to pay $3.95 for generic drugs and $9.85 for brand-name drugs in 2022, or 5% or retail price, whichever is higher. However, few people reach the coverage gap and catastrophic coverage stages.

As you can see, there are plenty of nuances involved when it comes to comparing Medicare plans. It is important to carefully compare Medicare Part D and Medicare Advantage plans before enrolling one, as you want to make sure that the plan that you are choosing covers the drugs that you need. Reach out today to speak with a licensed insurance agent and explore affordable Medicare plans available to you.

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