Medicare Part D Coverage
Medicare Part D coverage provides beneficiaries with help paying for prescription drugs. Each Part D plan has a formulary or list of covered drugs; before you enroll in a policy, make sure your medications are covered.
Formularies will vary between plans, as will costs. Prevent any unnecessary expenses by understanding how Medicare Part D plans work.
Here’s what you should know about Part D coverage and the upcoming changes you can expect.
Medicare Part D Coverage
First and foremost, Medicare Part D coverage is an optional prescription drug coverage plan for Original Medicare beneficiaries. Therefore, Medicare offers Part D coverage for anyone enrolled in Medicare.
You may get Medicare Part D coverage in one of two ways:
- Medicare Prescription Drug Plan
- Medicare Advantage Plan
If you have drug coverage from your employer, TRICARE, etc. it’s important to understand how Part D will work with your current plan.
Compare the coverage you currently have to Medicare Part D drug coverage. Consider all coverage options; Medicare Part D can alter your current drug coverage.
Your carrier should give you information on any drug coverage you have or may be eligible for, make sure to read them.
Before you start making changes to your current drug coverage, get a second opinion from your plan provider. They can make sure you’re making the best decision possible for your prescription needs.
Part D Deductible Phase
Medicare Part D costs may change during the year. 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 costs will vary between plans – in 2019, no plan may exceed $415; and some plans have a $0 deductible rate.
The First Phase of Coverage
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 2019, the initial coverage phase stops once your total drug cost is $3,820. Your total drug cost is the amount both you and your plan have paid for medications.
Medicare Part D Coverage Gap
During the Medicare Part D coverage gap phase, beneficiaries should keep a few things in mind.
If you’ve gone in the coverage gap your total drug cost met a specific amount ($3,820 in 2019 for most). 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.
Part D 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 2019, this amount can be up to $5,100.
Catastrophic Coverage Phase
In 2019, after you’ve spent $5,100 out-of-pocket for medications on the formulary, you’ll enter the catastrophic coverage phase. This rule applies to ALL Medicare Part D plans.
While this may be true, it’s important 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 $3.40 for generic drugs, $8.50 for brand-name drugs, OR 5% of the price for your medication – whichever cost is greater.
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 (including manufacturer’s discounts)
- Expenses paid by any person on your behalf
- Costs paid for by State Pharmaceutical Assistance Programs, AIDS Drug Assistance Programs and/or the Indian Health Service
Additionally, monthly premiums, out-of-network pharmacies, non-covered drug costs and the 63% discount on generic drugs are NOT included.
PDP Drug Rules that Affect Coverage
Certain safety rules a plan can implement to keep costs lower. The most common ways medication policies prevent people from overusing or misusing certain drugs include step therapy, prior authorization, and quantity limits.
Step therapy requires beneficiaries to use more affordable alternate medications that should treat the same conditions before the higher cost medication can have coverage. When lower cost medications work, the beneficiary and the insurance company both save money. If the lower cost drug isn’t effective the doctor can write the insurance company and explain why you need the expensive alternative.
Prior authorization is when the doctor needs plan approval prior to the pharmacy dispensing your medication. The insurance company wants to see that the medication is medically necessary and lower cost alternatives must’ve been proven to be ineffective or harmful. This restriction is typically for high cost or potent medications.
Finally, quantity limits can be restrictions on the number of pills you purchase at once or the allowable amount on refills. When your doctor wants to prescribe above quantity limits you must have them file an exception form with a reason for the need.
The cost of medications can change because of these restrictions. It’s vital that you check the formulary to understand if your medication has restrictions that apply. Working with an agent can make this a much easier process.
The nationwide Part D monthly premium for 2019 is $33.19, on average. Depending on your service area and the plan you choose, this amount may change. Beneficiaries will pay this amount plus the Medicare Part B monthly premium.
Medicare beneficiaries with income higher than a certain amount will pay an income-related monthly adjustment cost plus the plan’s premium. This will affect beneficiaries with an income tax bracket $85,000+ (single) or $170,000 (joint).
If you’re on a Medicare Advantage Plan that includes Medicare prescription drug coverage, the amount for drug coverage should be included in the plan’s monthly premium.
If your plan has a deductible, it must be met prior to coverage starting.
Monthly statements are sent to beneficiaries by their plan. The statement should include a record of the amount spent out-of-pocket for covered drugs and the status of current coverage phase.
Beneficiaries who have Extra Help won’t have a coverage gap. The costs of prescription drugs will be different throughout the year; this may also be true for those enrolled in a State Pharmaceutical Assistance Program.
Certain circumstances may cause your plan to change the cost of your prescriptions during the year. If any changes are made to your plan, the plan must let you know.
Lastly, the Part D Medicare coverage cost of deductibles and premiums can NOT change during a plan year.
Get Medicare Part D Coverage
If you’re a Medicare beneficiary, you can get Medicare Part D coverage. A late penalty may apply if you postpone enrollment when you’re first eligible. This penalty gets higher the longer you don’t have Part D coverage.
The only exceptions are if you have other prescription drug coverage, or receive Extra Help benefits.
If you want to get Medicare Part D coverage you’re required to enroll in a Medicare-approved plan that offers prescription drug coverage. Plan costs and benefits will depend on the plan you join.
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