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Costs of Medicare Part D

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The out of pocket costs for Medicare Part D includes the initial deductible, initial coverage limit, out of pocket threshold and the coverage gap, also known as the donut hole.

Part D Out of Pocket Costs

Medicare Part D Deductible for 2021

The initial deductible for Part D is $445 in 2021.

Initial Coverage Limit for Part D for 2021

The initial coverage limit for Part D is $4,130 in 2021.

Out-of-Pocket Threshold for Part D in 2021

The out-of-pocket threshold is $6,550 in 2021.

What is the Coverage Gap

The coverage gap is known as the donut hole. It begins once you reach your Medicare Part D costs plan’s initial coverage limit and ends when you spend a total of $6,550.

Part D enrollees will receive a 75% discount on the total cost of their brand-name drugs purchased while in the donut hole. The 75% discount paid by the brand-name drug manufacturer will apply to get out of the donut hole.

For example: if you reach the donut hole and purchase a brand-name medication with a retail cost of $100, you will pay $25 for the medication, and receive $95 credit toward meeting your total out-of-pocket spending limit.

Medicare prescription drug costs vary by policy, based on the list of covered drugs, also known as the plan’s formulary. Policies that cover prescription drugs usually put covered drugs into cost tiers, with individual cost-sharing for the medications on each tier.

How Much is Medicare Part D?

Legislators are working hard with Medicare to lower the premium and other costs that come with Part D. Also, having more pharmacy options as well as prescription options available to beneficiaries.

Medications that fall on the higher tiers attract higher coinsurance costs and co-payments compared to those on the lower tiers. Private insurers set their own premiums, so it pays to compare plans in your area to make sure that you’re choosing the right plan for your prescription drug needs

Keep in mind, Medicare prescription drug policies and Medicare Advantage drug plans vary in terms of the particular medications they cover as well as the costs the beneficiary pays. This is despite the prescription drugs being the same.

Medicare drug costs depend on:

  • The medications you take, and how frequently you take them
  • Whether the pharmacy you go to is within the network of your plan
  • Your medications are on your Part D’s formulary
  • Whether you have chosen the stand-alone Part D Medicare Prescription Drug policy or the Medicare Advantage Drug Plan
  • If you receive extra help paying your Part D Medicare costs

One major cost that you should consider is the monthly premium. Stand-alone Part D policies and Medicare Advantage policies have a monthly premium. Other than the monthly premiums, you may have to pay an annual deductible and a co-payment/coinsurance.

Part D Premium Income Brackets

Premium based on income is as follows:
Individual Annual Income Couples Annual Income What you pay in addition to your regular Part D premium
Equal to or below $85,000 Equal to or below $170,000 $0
$85,001 – $107,000 $170,001 – $214,000 $12.40
$107,001 – $133,500 $214,001 – $267,000 $31.90
$133,501 – $160,000 $267,001 – $320,000 $51.40
$160,001 – $499,999 $320,001 – $749,999 $70.90
$500,000 and above $750,000 and above $77.90

Medicare Part D Formulary for 2021

As mentioned above, each drug policy has its formulary. As a beneficiary, it’s good to check your plan’s formulary to confirm if your drugs are covered. Call our advisors for more information on this! Below are a few examples of what prescriptions are & are not covered.

Covered Prescriptions:

  • Certain vaccines
  • Insulin and all the equipment associated with insulin injection (needles, gauze, syringes, and alcohol swabs)
  • Barbiturates
  • Benzodiazepines
  • Prenatal vitamins

Not Covered Prescriptions:

  • Drugs for cosmetic purposes
  • Medicines for anorexia, weight gain or weight loss
  • Drugs meant to relieve colds and coughs
  • Medications for erectile dysfunction
  • Individual outpatient drugs
  • Over-the-counter medications
  • Minerals or vitamin drugs except those noted in the formulary
  • Fertility drugs

2021 Tiers for Medicare Part D

The same formulary drug tier definitions are used on 95% of stand-alone Medicare PDPs and 76% of MAPDs. Also, Medicare plans use these tiers to organize covered prescriptions into cost-sharing groups. Even though these drug plans use the same 5-Tier formulary, each PDP insurance plan individually determines which medications will be placed into what tier groups.

  1. Preferred Generic
  2. Generic
  3. Preferred Brand
  4. Non-Preferred Drug
  5. Specialty Tier

How to Make Part D Late Payments

If you’re late or have missed a payment for your Part D prescription plan, there may be a few options available to you. Medicare has certain rules when it comes to late and missed payments, however, it’ll be up to your plan to choose how they proceed.

These are Medicare’s rules for late payments of Part D premiums:

  • You can still receive coverage without penalties
  • You’re granted a grace period and warning
  • You receive a letter informing you to contact your plan for resolution

You must receive notification before a plan can drop you from your coverage. Grace periods can be granted and must be at least two months but can be more depending on which plan you have. The grace periods begin on day one that your premium hasn’t been paid.

The Plan Disenrolls You

Single Grace Period – When there’s been at least one payment that’s been unpaid during your grace period, your health plan can end your coverage at the end of the timeframe allotted.

Rollover Grace Period – If you’re behind on more than one premium payment but can pay a minimum of one payment owed during this grace period, the period will end. Your plan will then notify you of your new grace period to pay other premiums owed.

This will happen until allowed payments are paid off. If you fail to make a premium payment during this point, your plan can drop your coverage.

FAQs

Can my prescription be moved to a lower cost tier group?
If one or more of your prescriptions have been moved to a formulary tier that is more expensive, you may be able to contact your plan carrier and ask them to move your prescription to a lower cost tier.
My medications co-payment is higher than retail cost, will I pay more if I use my Part D plan?
No, between you’re planning co-pay and retail drug cost, you’ll always pay the lesser of the two. However, if the plans co-pay for your medication is $39 but the negotiated retail cost is $15, you’ll only have to pay the retail cost.
What happens if I cannot afford my prescription medications?
Medicare provides a program known as Extra Help or Low-income Subsidy, to qualified individuals with low incomes. If you’re a member of Medicare and meet the requirements of the program, you may qualify for the “Extra Help.” Those who qualify will get help paying for their Medicare Part D expenses which may include cost-sharing, deductibles, and premiums.

How to Get Help with Medicare Part D Costs

Our agents are here to help you find the most affordable option that will give you the most benefits. They will add all of your prescriptions to a list to make sure they are not only covered but to let you know what you can expect to pay for each one. Give us a call now, or use our compare rates form to see rates in your area on Part D plans now.

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