It’s getting more and more common these days for older adults to be on one or more prescription medications. Some medications, like insulin for diabetics or blood pressure medicine for people with cardiovascular disease, are drugs that some people literally cannot live without.

Complicating things is the fact that prescription drug prices are constantly on the rise. Medicare Part D is the stand-alone prescription drug plan which helps seniors afford their life-saving prescriptions. And this page will tell you the basics of how that plan works.

Medicare Part D Key Takeaways

  • Part D is a stand-alone supplement that pays for prescription drugs
  • You must be enrolled in both Part A and Part B in order to be eligible for Part D
  • The formulary is the list of approved prescription drugs that are covered by your specific Part D plan
  • The formulary is divided into several tiers
  • Part D comes with a monthly premium, annual deductible, and copays

The Origins of Medicare Part D

Back in 2003, Congress passed a law called the Medicare Modernization Act. Three years later, the Part D plan was in full effect. As you might be able to guess by the name, it was designed to help seniors like you afford the increasing amount and cost of prescription drugs they need to stay healthy in their golden years.

Medicare Part D Eligibility

How do you know if you’re eligible for Part D? The easiest answer is if you are currently enrolled in Parts A and B. Keep in mind that Part D is a private plan, and works alongside (but is not a part of) Original Medicare. This is why it’s so easy to add prescription drug coverage to a Part C plan.

Medicare Part D Coverage

Unsurprisingly, Part D is a very limited form of supplemental coverage. You will be limited to those drugs on your formulary, which are prescription drugs approved by the Food and Drug Administration. As we stated earlier, the formulary separates drugs into different tiers in order to determine the price. The lower-tier the drug, the more affordable it would be.

Here’s a brief list of everything that Part D doesn’t cover:

  • Cosmetic drugs
  • Over the counter drugs like cold or cough medicine
  • Erectile dysfunction drugs
  • Fertility drugs
  • Drugs designed to help someone lose or gain weight, even if they have a serious disorder like anorexia
  • Supplements that have not received FDA approval
  • Any drug which is not available in the United States

Medicare Part D Cost

The base costs that you will be expected to pay as a Part D prescription drug plan member are your monthly premium and your yearly deductible. Once you hit that threshold, your plan steps in to take care of most of the costs.

Part D Premium for 2022

The monthly premium will vary from plan to plan. The carrier sets its own rates. In 2022, you can find Part D plans for less than $10 a month. The average monthly premium is around $33 per month.

Part D Deductible for 2022

The Part D annual deductible for 2022 is $480. But your deductible may be lower depending on your zip code. The good news is, a company cannot charge a higher deductible than $480.

Part D Copays

Normally there are around 5 tiers in Part D drug formularies. Tier 1 is a preferred generic medication. Tier 2 is a non-preferred generic. Their 3 is the preferred brand. Your copay is set by the carrier. Medicare has a Drug Finder Tool that allows you to plug in your zip code and medications to see which plans in our area are available.

Donut Hole

Some seniors who are on lots of medications, expensive medications, or both may risk falling into the Medicare donut hole. This is an unfortunate coverage gap that you may fall into if your drug costs exceed a certain limit.

The only ways to get out of the donut hole are to either spend enough money to qualify for catastrophic coverage or to wait until the end of the year when your costs are reset.

Extra Help

Extra Help is a special discount program that helps seniors pay even less for their prescription drugs if they qualify. But it’s hard to estimate how much money you could save due to how many variables are involved in that equation.

Your prices will vary based on:

  • Whether or not you qualify for low-income status
  • The type of Part D plan you have
  • The drugs you need
  • The pharmacy or pharmacies you use to get your drugs
  • Whether or not the drugs are on your plan’s formulary

Joining a Part D Drug Plan

The best time to sign up for a Part D plan is either during your Initial Coverage Election Period or the Annual Election Period which lets you change your Medicare Plan. Your Initial Coverage Election Period is the 7 months surrounding your 65th birthday. The Annual Election Period Starts on October 15 and ends December 7 each year.

How Part D Works With Other Insurance Plans

Because Part D is a supplemental plan, it works well with many other insurance plans which do cover your comprehensive healthcare needs. These insurance plans include:

  • Employer/Union coverage
  • COBRA
  • Medigap
  • Medicaid

Seniors who may want to decline a Part D prescription drug plan are people who already have better benefits, including:

  • Veteran’s benefits
  • TRICARE military benefits
  • Indian Health Services
  • FEHB – Federal Employee Health Benefits

For seniors who are working with limited finances – such as those receiving HUD housing assistance, food stamps, or who are living in a long-term care facility – There are special rules which apply to you.

by Lindsay Malzone, Lindsay Malzone is the Medicare expert for Medigap.com. She's been contributing to many well-known publications as an industry expert since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.
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