One of Medicare beneficiaries’ most significant concerns is their prescription coverage. The Original Medicare program didn’t cover prescription drugs filled at a retail pharmacy. Part D is how you get your prescriptions covered under Original Medicare.
As we get older, we all know we don’t get healthier, but we do our best to stay as healthy as possible, and prescription drugs are part of that equation.
What is Medicare Part D?
Medicare Part D is insurance through private insurance companies such as Humana, Aetna, and Cigna. You enroll in one of their plans to cover your prescriptions. All drug plans must be as good or better than the standard model laid out by Medicare and the Centers for Medicare and Medicaid Services.
Medicare Part D Costs
The base costs you will pay as a Part D prescription drug plan member are your monthly premium and a yearly deductible. Once you hit that threshold, your plan steps in to take care of most of the costs. However, when you fill your prescriptions, you’re left with copays and coinsurance.
Medicare Part D Premium
The monthly premium will vary from plan to plan. The carrier sets its rates. This year, you can find Part D plans for less than $10 a month. The average monthly premium is around $31.50 per month.
Medicare Part D Deductible
The Part D annual deductible is $505. But your deductible may be lower depending on your zip code.
What Drugs are Covered by Medicare Part D?
A formulary is a list of covered drugs. There must be at least 1 type of drug in each therapeutic category covered on any plan formulary. All plans separate the prescriptions into tiers.
These tiers organize drugs into cost-sharing groups. Typically Tier 1s are the least expensive, and Tier 5 is the most costly. Most drug plans have five tiers, but a few have the 6th tier.
Medicare Part D Drug Tiers
- Tier 1: Preferred Generics: Common generic drugs and usually the lowest cost.
- Tier 2: Non-Preferred Generics: Less Common generic drugs that are relatively inexpensive.
- Tier 3: Preferred Brands: Commonly used brand-name drugs that work for most people
- Tier 4: Non-Preferred Brands: Less common brand-name drugs
- Tier 5: Specialty Tier: These are the most uncommon and expensive; typically, you will pay the most for these prescriptions.
- Tier 6: Select Care Drugs: Only on about 5% of plans. Select care drugs are common drugs for specific health conditions. Programs with a tier 6 usually have a better cost share on the particular drugs in tier 6.
Coverage Stages of Medicare Part D Program
There are four coverage stages under the Part D program. The coverage model phases are as follows:
- Deductible Phase
- Initial Coverage Phase
- Coverage Gap
- Catastrophic Phase
You pay the total retail price of the prescription until you meet the deductible or $505. Some plans have lower deductibles, and sometimes they are only for certain drug tiers.
Initial Coverage Limit Phase
You pay 25% of the retail cost of the prescription or the plan copay, whichever is less.
Otherwise referred to as the donut hole – once the retail cost of your prescriptions reaches $4,660, you’ll be responsible for 25% of the retail price of the medication. During this phase, the drug manufacturer is responsible for 70% of the cost, and the plan pays 5%.
Once you have paid the Total Out-Of-Pocket cost (TrOOP) $7,400, you move out of the coverage gap phase and into the Catastrophic phase. You will pay 5% of your drug’s retail cost during this phase.
Part D Late Enrollment Penalty (LEP)
With Medicare Part D, it’s recommended to take drug coverage. Part D coverage isn’t mandatory. Suppose you’re eligible for prescription coverage and don’t have coverage.
In that case, you’ll receive a penalty later in life when you decide to start a Medicare prescription drug plan unless you’ve had continuous coverage.
What if I’m not currently taking any prescriptions?
A common topic is, “I don’t take prescriptions. I don’t want to pay for something I am not using.”
While this is a compelling argument, no one wants to pay for something just to pay for it. It’s essential to understand the value of why you should take one.
What happens if mid-year, your doctor needs to add a medication? As we mentioned earlier, we don’t get healthier with age. It’s more likely that we’ll need coverage in the future than we won’t.
You will be penalized if you don’t enroll in a plan and don’t have creditable drug coverage. Creditable coverage includes such as Veterans Affairs (VA) or employer coverage.
How Does the Part D Penalty Work?
For every month you go without creditable drug coverage, once you’re eligible to take a Part D plan, you’ll accrue a 1% penalty. The penalty gets calculated on the average Part D cost of the year. The average cost does change annually.
Part D Penalty Example
If you go four years without prescription coverage, that’s a 48% penalty. If you choose a drug plan that’s $15 a month, you would be paying an additional $16.32 a month on top of your premium.
Giving you a total of $31.32. ($15 + $16.32 = $31.32) This penalty never goes away and is applied to whichever plan you choose.
Drugs Not Covered Under Part D
- Drugs used for anorexia weight gain, or weight loss
- Over-the-counter medications
- Vitamins and minerals
- Fertility Drugs
- Cosmetic drugs
- Standard cold and cough medicine
- Prescriptions for erectile dysfunction
Eligibility for Enrollment in a Medicare Part D Plan
Enrollment in Medicare part D coverage requires a valid enrollment period, active Medicare Part A or Part B, and you must live in the plan’s service area. Next, we’ll explain the different times you can enroll.
Initial Enrollment Period
The Initial Enrollment Period (IEP) begins when a Medicare beneficiary first becomes eligible for Medicare. The period begins three months before the Medicare start date and continues for three months after.
Annual Enrollment Period
The Annual Enrollment Period (AEP) is every year starting in October and runs from October 15 to December 7. During this timeframe, beneficiaries can change coverage with the new plans beginning on January 1.
Medicare Advantage Open Enrollment Period
Beneficiaries already enrolled in a Medicare Advantage plan can make one change, including dropping their Medicare Part C plan and enrolling in Medicare Part D coverage. The MAOEP starts on January 1 and continues until March 31.
Special Enrollment Period
A Special Enrollment Period (SEP) occurs when specific life-changing events happen. Some examples include losing group coverage, moving, or loss of assistance such as Medicaid or extra help.
Is Part D the only option for Medicare prescription drug coverage?
You have two Medicare prescription drug benefits options: a Medicare Part D stand-alone drug plan or a Medicare Part C health plan. Medicare Advantage plans are another way to get your Medicare benefits, including prescription drug coverage.
What’s prior authorization?
Some prescription medications are only covered after the Medicare Part D drug plan has received a notice from the doctor stating it’s medically necessary. Your healthcare provider must fill out a specific prior authorization form and send it to the health insurance company. Once received, the plan can choose to approve or deny the prior authorization.
What do quantity limits mean?
Medicare Part D coverage limits how much you can have over the refill period for specific prescription drugs. Usually, these include opioids and narcotics.
What’s step therapy?
Step therapy is a process where the doctor must try lower-cost drugs first. If they don’t work, then gradually try more expensive medications.
Is there help with paying for Medicare Part D costs?
A few programs can help with costs associated with Medicare Part D Coverage. If you’re low-income, you can apply for extra help through the Low-Income Subsidy program.
You can also turn to your state’s SHIP or State Pharmaceutical Assistance Programs (SPAP). Medicare beneficiaries enrolled in the Medicaid program automatically qualify for the extra help program.
Are prescriptions given during an office visit covered?
Medications administered as an outpatient at the physician’s office fall under Medicare Part B. These are commonly injections for conditions such as Rheumatoid Arthritis.
Do Medicare Supplement Plans include prescription drug coverage?
No! Medigap plans don’t include Medicare prescription coverage. You’ll need to enroll in a Part D prescription drug plan to have coverage for prescription medications.
How to Apply for Medicare Part D?
The best way to choose Part D coverage is to speak to a licensed agent. A licensed agent has tools to check your prescriptions against each plan’s formulary, see which plan covers your needs, and provide lower prescription drug costs.
Give us a call today to help you find the plan that best fits your individual needs. You can also complete our online rate form to see rates in your area now.