Medicare Part D
Medicare Part D prescription drug plans help lower the cost of prescriptions. Beneficiaries can pay copayments instead of paying the full price of prescribed medicines.
For over 40 years, beneficiaries had no options for retail prescription drug coverage. Prescription Drug plans provide coverage for medications; however, enrollment is optional.
These plans are standard for those who have Medicare coverage. You have the option to enroll in a Part D plan through a private insurance company.
Medicare can be challenging to understand. Part D is no exception; here’s what you need to know!
Medicare Part D for Prescription Drugs
Prescriptions can be costly when paying out-of-pocket. Part D is a program that helps lower some prescription expenses.
When you first become eligible, drug plan enrollment should be a priority, especially if Medicare is primary.
If you’re still working, you may delay your Part D enrollment until you decide to retire. Although, you must have employer insurance must be better than or as good as Part D coverage.
Otherwise, if you delay enrollment, the Part D late enrollment penalty applies.
Part D Coverage Phases
There are four phases of coverage with prescription drug plan enrollment. It’s important to understand these phases, particularly if you require high-cost drugs.
The four phases are:
- Deductible Phase (if applicable)
- Initial Phase
- Donut Hole Phase
- Catastrophic Phase
The Deductible Phase
Medicare Part D costs may change during the year. The reason being, Part D coverage has four different phases.
The first up – Part D deductible phase. You’re responsible for prescription costs until you meet the Part D deductible.
After you reach your deductible amount, Part D will then cover the cost of your medications. Although deductible expenses will vary between plans – in 2020, no plan may exceed $435; and some cost $0.
The Initial Coverage Phase
The initial coverage phase is the second phase of Part D coverage. Once your deductible is met, Part D helps cover the costs of your prescriptions.
Beneficiaries are responsible for the costs of any co-payments or co-insurance; meanwhile, your plan will pay its’ share of the cost.
The length of your initial coverage phase depends on drug costs and the benefits your plan offers. As of 2020, the initial coverage phase stops once your total drug cost is $4,020.
Your total drug cost is the amount both you and your plan have paid for medications.
The Donut Hole Phase
During the Donut Hole phase, beneficiaries should keep a few things in mind.
If you’ve gone into the coverage gap, your total drug cost met a specific amount. Once you’re in this period, your plan doesn’t cover the cost of prescription drugs.
Luckily, due to health reform – federal discounts will help with these expenses during the donut hole.
For the majority of brand-name drugs in 2019, a 75% discount by the drug manufacturer and the federal government. That leaves only 25% of the cost up to you, making prescriptions still affordable.
Likewise, there’s a 63% discount for generic drugs; the beneficiary is responsible for the remaining 37% of the cost.
Donut Hole Closing up in 2020
2020 brings even more savings for prescription drugs! The percentage of coverage gap savings will increase every year until 2020.
You’ll still get the 75% discount on brand-name prescription drugs that Medicare covers.
In 2020, these drugs will only cost you 25% of the price. You pay this percentage from the time your deductible is met until your spending limit for out-of-pocket costs is met.
In 2020, this amount can be up to $6,350.
Catastrophic Coverage Phase
In 2020, after you’ve spent $6,350 out-of-pocket for medications on the formulary, you’ll enter the catastrophic coverage phase. This rule applies to ALL Part D plans.
While this may be true, it’s essential to understand this is ONLY the amount you’ve paid. From this point through the remainder of the year, copays or coinsurance prices are substantially lower for your covered prescriptions.
For instance, you’ll be responsible for either $3.60 for generic drugs, $8.95 for brand-name drugs, OR 5% of the price for your medication – whichever cost is higher.
Some out-of-pocket expenses that can bring you to the catastrophic coverage phase are:
- Your plan’s deductible
- Amount paid during your initial coverage phase
- The cost of brand-name drugs spent during your coverage gap phase
- Expenses paid by any person on your behalf
- Fees paid for by State Pharmaceutical Assistance Programs, AIDS Drug Assistance Programs, and the Indian Health Service
Also, it doesn’t include monthly premiums, out-of-network pharmacies, non-covered drug costs, and the 63% discount on generic drugs.
Part D Spending that Medicare Tracks
True Out of Pocket Costs (TrOOP) is something Medicare will track annually. Since Medicare tracks spending, you get protection from paying the same thing two times.
So, if you reach the deductible before you move out of state, then expect that you don’t need to meet the deductible in your new area.
The same goes for the coverage gap as well as the catastrophic phase; no matter where you move, Medicare knows your stage. Every year you can change plans since benefits change.
During the Annual Election Period plan changes can be made without penalty. If you qualify for a Special Enrollment Period, you can change plans without penalty.
Medicare Open Enrollment 2020
The return of the Open Enrollment Period brings significant changes. Open Enrollment 2019 allows Advantage beneficiaries to switch to a different Advantage plan.
For Advantage beneficiaries, this period runs from January 1st – March 31st.
The Annual Enrollment Period takes place each year. The AEP is from October 15th – December 7th.
AEP is the yearly time to change coverage and have a new policy effective January 1 of the following year.
Part D Late Enrollment Penalty
Part D plans are optional; however, doctors and insurance agents both recommend you have a plan.
Remember, failing to enroll in Part D could result in penalty charges, and those penalties accumulate over time. The longer you delay enrollment, the more you’re going to pay in late fees.
Buying coverage sooner rather than later will protect you from late fees.
Medicare calculates the penalty as follows:
1% of the national average base Part D premium for every month that you went without or had no other creditable coverage. Rounded to the nearest $.10, the penalty is in addition to your new Part D premium.
Depending on how long you delay enrollment, it determines the cost of the penalty charge. The exception is if you had another Part D plan equal to or better than Part D, Medicare waives the penalty.
Used in conjunction with Original Medicare
You’ll lose membership in a Medicare Advantage Part D if you sign up for a stand-alone prescription plan.
Part D Premiums
Premiums vary depending on the plan that you select. Most people pay the same premium price, but an extra charge applies if you have a high level of income.
The fee is called the Part D income-related monthly adjustment amount. The government assists people who need help paying for Part D.
Depending on where you live, more assistance may be available from state or federal agencies. You must meet income and asset requirements to qualify.
Preferred Pharmacy Network for Part D
Each plan has different rules about the pharmacies that you can use. You might only be able to use specific pharmacies on a list.
It’s essential to choose a plan that allows you to buy drugs at a nearby store. Otherwise, you may need to travel long distances with a medical condition.
Prescription Plan Deductibles
Every plan sets its deductible. You won’t have coverage until you’ve spent this much money on prescription drugs in one year.
The government caps deductibles at a certain amount; this limit changes from time to time.
Insurers charge co-pays. These costs differ depending on the plan that you choose.
Every insurer has a list of drugs that it covers. Insurance companies often classify drug costs into multiple tiers.
High-tier drugs have more significant co-pays. However, insurers make exceptions from time to time.
A company might pay a more significant portion of a drug’s cost if a doctor convinces them that less expensive drugs couldn’t treat your condition.
Doctors, pharmacists, and patients must follow the rules to maximize benefits. For instance, a Part D plan may limit you to buying a smaller amount of pills in each purchase.
Insurers often require doctors to ask before ordering certain high-cost medicines. The insurance company could require you to try a less expensive drug before covering
a more costly drug.
Medicare Part D Enrollment Periods
Part D plans are specific to the area you reside in; you must enroll in policy in your service area.
Enrolling in a Part D plan can be done online or by calling one of our agents at the number above; beneficiaries should enroll during a Part D Enrollment Period.
Medicare Advantage can have Part D on the plan. If you select an MAPD, you won’t need a Part D plan.
When is the Enrollment Period for Part D
Medicare has specific windows of time you can join in a Part D drug plan.
For example, the first time you may enroll is during your Initial Enrollment Period (IEP).
The Initial Enrollment Period is the 7-month window to enroll when you first qualify for Medicare Eligibility. You have three months before and after turning 65, and the month of your 65th birthday.
Those eligible for Medicare because of a disability have access to Part D IEP. Then, you have a second chance that allows you to change plans during the Annual Election Period.
The Annual Election Period runs every year from October 15 through December 7. You can enroll or dis-enroll from any Part D drug plan without penalties.
Changes may include benefits, formulary, pharmacy or doctor network, premiums as well as other costs.
Part D Annual Notice of Change
Beneficiaries get an Annual Notice of Change in September by mail; this notice lists any changes. Any changes made to your Part D plan begins on January 1 next year.
Once enrolled, if satisfied with your Part D plan changes, the renewal is automatic the following year.
Beneficiaries may need to change drug plans during the AEP due to changes in medication needs, and switch to a program that is more suitable for them.
What other Enrollment Periods are for Medicare prescription drug plans
After enrolling in Part D, changes can’t happen for the rest of the calendar year.
Beneficiaries can change plans or dis-enroll during the Open Enrollment Period. Also, Medicare is aware that life happens; certain circumstances may cause a need to change plans before the next AEP.
During some instances, Medicare grants a beneficiary with a Special Enrollment Period (SEP). For example, if you were to move to another state or your group medical coverage ends mid-year, the SEP would apply.
The Benefits of Selecting a Medicare Prescription Drug Plan
Trying to find the best plan for you can be overwhelming. Don’t worry. We’re here to help free of charge.
Our licensed brokers work hard to help you through this process. We know it can be challenging trying to decide the best plan.
The 2020 options are available now, and there are more plan options than ever before. Also, the cost of the premium has been on a steady decline, reaching the lowest average price since 2013.
If you’re a beneficiary, seeking assistance in choosing the right plan for you, you’ve come to the right place. We’re here to answer any questions or concerns.
After you join through one of our agents, you’ll have access to our client care team through the life of your policy.
Enrolling in a Part D Drug Plan saves you money for drugs that can be costly. We can help you by joining online here, or you can give us a call at the number above.