What is Medicare Part D Prescription Drug Plans

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Medicare Part D is a federal health insurance program for those who are 65 or older, certain people with disabilities, and those with End-Stage Renal Disease. Most people learn about this option several months before their retirement.

However, the whole ordeal can still be overwhelming. Transitioning to Medicare can be quite confusing. Regardless of the type of health insurance you had prior to Medicare, there is still a lot to learn in order to make the right choice.

Medicare Part D Prescription Drug Plans

Understandably, you may have many important questions. One of the big questions to ask is “What is Medicare Part D?” Medicare Part D refers to prescription drug plans available for Medicare beneficiaries.

This refers to how you will be able to afford your prescriptions under your chosen Medicare plan. Fortunately, there are a few different ways to receive prescription drug coverage once you qualify for Medicare.

Original Medicare and Stand-Alone Drug Plans

Generally, when you qualify for Medicare, you are automatically enrolled in Part A, then you have the option to enroll in Part B. If you choose to enroll in Medicare Part B, it is important to understand that you will be required to pay the Part B premium.

Those who have both Medicare Parts A and B are said to have Original Medicare. These Medicare beneficiaries can choose to pick a separate Part D plan to cover their prescriptions. These plans are also referred to as Stand-Alone drug plans. These Part D plans are available through insurance companies and have their own premium.

Medicare Advantage Plans

Once you have both Medicare Parts A and B, you also have the option of selecting a Medicare Advantage, or Part C, plan. With these plans, you have the benefits of Original Medicare as well as additional benefits. The number and type of Medicare Advantage plans available for you depends on your area.

One of the added benefits to a Part C plan may be prescription drug coverage. Other benefits of a MA plan can include set co-pays, vision and dental benefits, and other perks. However, it is important to know that not all Medicare Advantage plans include Part D. So, if you choose one of these plans, be prepared to select an additional Stand-Alone plan for prescriptions.

Medigap or Medicare Supplement Plans

Another option is known as Medigap or Medicare Supplemental plans. These plans also work with Original Medicare to cover the out-of-pocket costs associated with healthcare. Because Medicare pays 80% of covered health services, beneficiaries may need help paying for the remaining 20%. There are a few things that you must know about these plans, however.

You must be 65 or older to qualify for a supplemental plan. Also, Medicare Supplement plans no longer include Medicare Part D. This means you will need to pick an additional plan to include prescription drug coverage unless you are already enrolled in a supplemental plan with Part D benefits.

Most people are extremely cautious about which plans they choose their Medicare plans. Aside from the Medicare Part B premium, you must also be prepared to pay additional premiums for the plans you select. There are also other important aspects to consider as well. First, you should be aware of the potential Part D penalty.

If you do not have credible prescription drug coverage once you qualify for Original Medicare, you become subject to a penalty. Medicare determines the amount owed by multiplying 1% of the national base beneficiary premium times the number of months you went without Part D coverage. This penalty is deducted from your Social Security benefits for life, regardless of whether or not you choose a plan immediately afterwards.

Extra Help Program

Another helpful piece of information is the Extra Help program available through Medicare. Extra Help helps those with certain limitations on income and resources to pay for the cost of prescription drugs. The level of assistance you may receive depends on your individual financial situation.
In addition, if you already qualify for Medicaid in your state, then you automatically qualify for Extra Help once you become eligible for Medicare. Extra Help or Low-Income Subsidy (LIS) also means that you can change your plan as often as necessary, unlike most people who must wait until the next Annual Election Period. 
No matter which route you choose, it is important to know as much information as possible. There is another thing to consider when asking “What is Medicare Part D?” Insurance companies make changes frequently, especially to their formulary. A formulary is a comprehensive list of the prescriptions that are covered under a particular plan.
This list is modified, as needed, based on prices and information from pharmaceutical companies and regulations set by the Centers for Medicare and Medicaid Services. It is important to make sure that your particular prescriptions are included in your plan’s formulary before making any commitment.