The government’s Medicare Program called Medicare Part D covers Prescription Drugs. The drug plans are not managed directly by the Medicare Program, they are provided by third-party insurers like AARP, Cigna, and others. Insurance Agents that specialize in Medicare plans can help you choose the Medicare Part D coverage that’s right for you.
Medicare Part D Covers Prescription Drugs
All the available Part D plans cover at least the most basic drug coverage mandated by Medicare, but the plans do vary in the types of drugs available, monthly premiums, and extent of coverage.
Some Medicare Advantage plans (Part C) have built-in prescription drug coverage. If you don’t have Medicare Part C but you want prescription drug and coverage, then Medicare Part D is usually the best option. Some individuals need additional coverages beyond the prescription drugs Medicare Part D covers. For those individuals, there are Medicare Options that can be combined with Medicare Part D.
You can contact a Health Insurance Agent for help to navigate the Medicare Program with all of its parts and options.
When to Enroll in Medicare Part D
If you are already enrolled in Original Medicare Part A and/or Part B, there are two ways to obtain Part D Prescription Drug coverage:
- You can enroll in a standalone Medicare Part D Prescription Drug plan at age 65. If you do not enroll at age 65, you can enroll any year after that during the open enrollment period.
- You can opt to join a Medicare Advantage plan (part C) that includes coverage of prescription drugs. However, be mindful as not all Medicare Advantage Plans cover drugs.
- A 7-month enrollment period begins for each individual 3 months before their 65th birthday.
It is important to be aware that enrollment is not automatic for Part D Drug plan. If you want Medicare Part D Coverage, you will need to select and enroll with a plan.
Medicare Part D explained
In most cases, a Part D plan will have three phases and they include the following:
A typical Part D plan has 3 phases and works like this:
- Phase 1 includes the Deductible and Initial Coverage: All Part D plans have an annual deductible. After one has paid drug costs equal to the set deductible, then one has initial coverage. During this phase, one will only pay a coinsurance/copay on the covered prescription medications that Medicare Part D Covers, until the limit of the initial coverage is reached. After that, the coverage gap is initiated – see below. The standard Part D deductible for 2020 is $435; however, it does change each year.
- Phase 2 includes the Coverage Gap, also referred to as the “donut hole.” During this phase, one pays a discounted fee for the covered generic or brand drugs in the plan. The moment the combined costs of drugs have reached the ceiling of the Coverage Gap, then one moves to phase 3 or Catastrophic Coverage.
- Phase 3 is the Catastrophic coverage where one only pays less than 5% of the drug costs. At this stage, the Medicare Part D covers the majority of the costs.
What medications Medicare Part D Covers
Before deciding to sign up for Medicare Part D, people often as “What medications does Medicate Part D Cover?
By Law, any drug that has been approved by the Food and Drug Administration is available only by prescription, sold and used in the United States, and has a medical indication is usually covered. Part D also covers biological products, vaccines, insulin, and certain medical supplies that are necessary for the injection of insulin (e.g. alcohol swabs, syringes, needles, gauze).
In general, Part D plans will cover medications to treat chronic disorders like asthma, high cholesterol, diabetes, heart disease, and the like. Additionally, Medicare Part D covers medications needed for a short time like antibiotics or pain pills. The medications that are covered under the Original Medicare Part B plan are usually not cross covered by Part D plans.
What medications are not included in Part D plans?
The law excludes a few medications related to the treatment of mental health disorders, including drugs when used for anorexia, weight loss, or weight gain; barbiturates; and benzodiazepines. Plans are required to include at least two medications from each therapeutic category or class (unless there are only two drugs in a class, in which case they can cover only one).
What is the cost of Part D prescription drug plan?
Out of pocket expenses for Part D prescription drugs include the following:
- A Part D monthly premium. The average monthly premium in 2020 is $33.
- Part B premiums must be continued as part of the Original Medicare coverage
- Coinsurance and copays. Every plan places the medications that are covered at different levels called tiers. Each tier has its own coinsurance or copay amount. Your medications may be listed on different tiers and hence the copay will also differ.
- If you have selected a Medicare Advantage Plan that includes prescription medication coverage, there is a monthly premium that will include the drug and medical portion of the plan.
Paying for Part D Premium
There are several methods to pay for Medicare Part D Prescription Drug Plan premiums and they include the following:
- The premiums can be automatically deducted from the checking/savings account or charged to a debit/credit card.
- The premiums can be deducted from the Social Security benefit/check.
- You can choose to be billed each month by the insurer.
- If your employer offers health insurance, he or she will pay for the Medicare benefits and costs.
What are the Benefits of Prescription Drug Plans Medicare Part D Covers?
Benefits of Part D Prescription Drug plans include the following:
- Lower cost of drugs: All Part D plans help lower the cost of expensive prescription drugs by offering cost coverage at various levels for different “classes” of drugs.
- The premiums for the plans are low and thus affordable by most people.
- The Part D plans are flexible and offer choices depending on your needs, benefits, and other insurance coverage that you may have.
- The Part D Prescription plans can be combined with Original Medicare (Part A and Part B) or may be included in a Medicare Advantage plan.
What are the disadvantages of Part D drug plans?
- All the available Part D plans do differ slightly in the types of drugs that are covered and hence you need to be fully cognizant of your medical health so that you can select a plan that covers the prescription drugs that you may need.
- While all Part D plans do offer a minimum coverage set by Medicare, the types of drugs covered do vary from insurer to insurer. Hence, before you enroll with a plan you need to educate yourself on each plan, evaluate the different plans anticipate your needs for the next 12 months.
- None of the Part D plans covers every single drug. Each plan has its own formulary (drug list), monthly premiums, and the extent of drug coverage.
- If you fail to enroll in a Part D plan at the time of your eligibility, then you will end up paying a late enrollment penalty. For each month that you have delayed with enrollment, Medicare will penalize you with a small fee that is added to your monthly premium.
- Unfortunately, for married couples, there are no-cost breaks. Medicare requires each spouse to pay separate copays, deductibles, and premiums for the prescription drug coverage.
- Be mindful that some Plans may change their formulary. Thus, it is vital that you always read the Annual Notice of Change that is sent to you every autumn. The onus is on you to make sure that the prescription medication(s) you need will be covered the following year.
How should one select a Medicare Part D plan?
Prior to selecting a Part D plan, you should consider the following:
- How many medications do you take? Are they available as generics? Do you have a chronic health problem (for example, diabetes) that requires medication accessories like syringes, needles, etc.? These are the types of questions your Health Insurance Agent will ask you to assist you in choosing the Medicare Part D Coverage that is best for you.
- Review the Part D drug plan thoroughly to ensure that it covers the medications you need, the copay/coinsurance and if generics are available.
- While standalone Part D plans are cheap, they often do not cover the cost of medications if you are in hospital. Plus, the coverage of medications in the standalone plans does vary significantly.
- Make sure that the drug(s) you require are within the plan’s service area.