Medicare Part D is a government program that helps individuals on Medicare cover some of the cost of prescription drugs. All Part D plans are offered by private insurance companies approved by Medicare.
ALL Medicare Part D plans must give at least a standard level of coverage set by Medicare. Most companies offer better coverage above the minimum standard. However, the costs and the drugs covered can vary by each plan.
Because Original Medicare doesn’t cover most prescriptions, most people purchase a Medicare Part D plan.
Who can enroll in a Medicare Part D plan?
You must have Medicare Part A or Medicare Part B to enroll in a prescription drug plan. No exams are required and everyone is approved regardless of health.
Options for Prescription Drug Coverage?
If you need prescription drug coverage, you will have two options for getting your Part D plan:
- Stand-Alone – Prescription Drug Plan (PDP) – This type of drug plan is for those on Original Medicare.
- Medicare Advantage Prescription Drug Plan (MA-PD) – This plan is usually included with your Medicare Advantage plan.
How much will I pay for my drugs?
There are four drug payment stages to a Medicare Part D Plan:
- Yearly Deductible
- Initial Coverage
- Coverage Gap
- Catastrophic Coverage
The yearly deductible stage starts when you fill your first prescription of the year. If your plan has a deductible – you pay the total cost of ALL prescription drugs until you reach the deductible amount.
Deductible could be $445 or lower depending on plan in 2021.
The initial coverage stage starts when you reach your deductible.(this assumes your plan has a deductible) During this stage you will share in the prescription drug cost by either coinsurance or copays. Member pays 25% and the plan pays 75%.
Initial coverage amount in 2021 will be $4,130.
Prescription costs are shared by member and the plan until $4,130. This amount includes costs paid by member, the plan and the deductible amount.
The coverage gap total in 2021 will be $6,550. During this phase the member pays 25% for brand-name and generic drugs. Once members out-of-pocket costs reach $6,550 they move to catastrophic coverage.
Once you reach the catastrophic coverage phase, members pay a small copay or coinsurance until the end of the year. Members will pay either 5% coinsurance or $3.70 for generic and $9.20 for brand-name drugs.
Important Reminders about Medicare Part D Plans
- You must have either Part A or Part B
- Plan deductibles can vary by company
- Covered prescriptions can vary by company
- You will pay a penalty later if you don’t enroll in Part D
- Always check the plans formulary before signing up
- Always check the plans network of pharmacies before signing up