Medicare Part D prescription drug plans help lower the cost of prescriptions. Beneficiaries can pay copayments instead of paying the full price of prescribed medications. For over 40 years, beneficiaries had no options for retail prescription drug coverage. Medicare can be challenging to understand. Part D is no exception; here’s what you need to know!
4 Medicare 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, no plan may exceed $445; 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. The initial coverage phase stops once your total drug cost is $4,130.
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, 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.
Catastrophic Coverage Phase
After you’ve spent $6,550 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.
Troop Medicare Part D
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.
Annual Premiums for Part D Coverage
The average annual premium for Part D coverage is $33.06. 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.
Do I Need Medicare Part D?
Part D isn’t mandatory, but delaying enrollment can result in penalties once you need the coverage. The best time to sign up for Part D is when you first become eligible for Medicare.
What is Preferred Pharmacy Networks 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.
What is the Medicare Part D Deductible?
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.
Medicare Part D Speciality Tiers
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.
What is the 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.
How to Enroll in Medicare Part D
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.
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, simply complete our online rate form here, or you can give us a call at the number above.