Medicare Part D
Medicare Part D is an optional part of Medicare that offers prescription drug coverage.
What is Medicare Part D?
Medicare Part D can be obtained through a number of private insurance companies. Medicare Part D offers prescription drug coverage to go along with your Original Medicare coverage. Additionally, you have the option to sign up for a Medicare Advantage plan that includes prescription drug coverage.
What does Medicare Part D cover?
Medicare Part D helps pay for both generic and brand-name drugs. Medicare prescription drug plans all have their own drug list (also called a formulary), and all plans must cover at least two drugs per category.
However, Medicare Part D plans are not required to cover certain drugs, such as weight loss and weight gain medications, medication for erectile dysfunction, and over-the-counter drugs.
But Medicare Part D drug coverage does include almost all drugs in the following protected classes:
- Antipsychotics
- Antidepressants
- Anticonvulsants
- Immunosuppressants
- Cancer drugs
- HIV/AIDS drugs
Medicare Part D Drug Tiers
Each drug plan’s formulary divides its medications into different drug tiers. Drug tiers are commonly organized as follows (though your plan may have a different way of organizing its drug tiers):
- Tier 1: Preferred generic prescription medications
- Tier 2: Non-preferred generic prescription medications
- Tier 3: Preferred, brand-name prescription drugs
- Tier 4: Non-preferred, brand-name prescription drugs
- Tier 5: Specialty tier, or very high-cost medication
In general, the higher the tier, the higher the copayment/coinsurance you will be responsible for covering.
Medicare Part D drug plans can change their coverage details over time or even throughout the year. That’s why it is so important to stay up to date on policy changes. A licensed insurance agent here at Medicare Plans Direct can answer any questions you may have about Medicare Part D prescription drug coverage.
How much does Medicare Part D cost?
You will have to pay a monthly premium for your Medicare Part D prescription drug coverage, and your premium amount will depend on the plan that you choose. You will want to do some research into a plan’s formulary before deciding whether or not it is right for you. While a plan may appear to be the more affordable option at first glance, it may not cover the medications that you need.
There are four stages of Medicare Part D prescription drug coverage that affect how much you need to spend out-of-pocket on your medications over the course of the year:
- Deductible: You will have to pay the cost of your medications, even with a Medicare Part D plan, until you reach your yearly deductible. In 2021, the maximum Part D deductible is $445, though plans may have lower deductibles.
- Initial Coverage: Your initial coverage starts after you have reached your deductible. This is when your insurance company begins to pay for a portion of your prescription drugs. You will either pay coinsurance or a copayment for your prescriptions during this time. After your total drug cost reaches $4,130 (the amount set for 2021), you will move into the coverage gap, or donut hole, stage.
- Coverage Gap/Donut Hole: Once you reach this stage, you will be responsible for paying 25% of the cost of your generic and brand-name medications. As mentioned, you reach the Medicare Part D coverage gap once your total drug costs have reached $4,130 (that includes both what you and what Medicare pay for medications, but not the price of your monthly premium). Not many people reach this threshold, but if you take especially expensive medications, it is a possibility that you should keep in mind.
- Catastrophic Coverage: To get to the catastrophic coverage stage, you have to reach $6,550 (the amount set for 2021) in True Out-Of-Pocket (TrOOP) costs. This amount includes your monthly premium, coinsurance/copays, and the drug manufacturer’s 70% cost. Once this happens, what you pay drops significantly. Now you will only have to pay $3.70 for generic drugs and $9.20 for brand-name medications, or 5% of retail price, whichever is higher. It is even more unlikely to reach the catastrophic coverage stage than the donut hole stage.
Once the calendar year ends, your Medicare Part D status resets and you return to the initial deductible stage.
Extra Help
Some low-income individuals may qualify to have the cost of their prescriptions subsidized. Extra Help , or the Part D Low-Income Subsidy, helps qualifying individuals to pay for their drug costs. Benefits can extend to cover your Medicare Part D monthly premium, deductibles, coinsurance, copays.
You are automatically eligible for Extra Help if you are receiving full Medicaid coverage from a state program or are receiving Supplemental Security Income (SSI) benefits. If you think you may qualify for Extra Help but aren’t sure, consult with one of our experienced insurance agents today.
Who qualifies for Medicare Part D?
Once you turn 65 and are eligible for Original Medicare, you will have the option to enroll in a Medicare Part D drug plan. However, to do so, you must also be enrolled in Medicare Part A and/or Part B.
Additionally, even if you are not yet 65, you may be eligible for Medicare Part D prescription drug coverage if you have a disability, ESRD, or ALS.
If you have a Medicare Advantage plan that already offers prescription drug coverage, you cannot enroll in a separate Medicare Part D plan.
Medicare Part D Enrollment
You must enroll in a Medicare Part D plan in the service area where you reside, and there are multiple ways to do so.
How To Enroll
You have a couple of options when it comes to enrolling in Medicare Part D prescription drug coverage.
You can either get prescription drug coverage through a “stand-alone” medicare drug plan. Alternatively, you can enroll in a Medicare Advantage plan that includes prescription drug coverage.
You should be aware that some Medicare Advantage plans don’t offer a prescription drug benefit. If your Medicare Advantage plan doesn’t come with drug coverage, you may or may not be able to enroll in a stand-alone drug plan.
Examples of Medicare Advantage plans that don’t allow you to enroll in a stand-alone drug plan if your policy doesn’t come with prescription drug coverage are HMO and PPO plans.
We recommend that you consult with a Medicare insurance expert to ensure that you are getting the Part D plan or Medicare Advantage policy that is right for you.
When To Enroll
You can enroll in Medicare Part D when you are first eligible for Medicare. This happens during your IEP, or when you first sign up for Original Medicare. This is the seven-month period that starts three months before your birthday month, includes your birthday month, and lasts until three months after your birthday month.
You may also have the option to enroll in Medicare Part D drug coverage during a Special Enrollment Period (SEP), which you can be granted in certain circumstances.
Finally, you can enroll in a Medicare Part D drug plan during the Fall Open Enrollment period (October 15-December 7 each year). If you are leaving a Medicare Advantage plan to go back to Original Medicare, you can enroll in Part D during the Medicare Advantage Open Enrollment Period (January 1-March 31 each year).
If you’re confused about when you can enroll in Medicare Part D, or aren’t sure which drug plan could be right for you, set up a consultation with one of the team members here at Medicare Plans Direct.
