Retirees and certain individuals receiving Social Security Disability Insurance benefits may qualify for Medicare, including Part D coverage. Here’s what you need to know about what Medicare Part D covers and how much it costs, so that you can better budget for your healthcare expenses.
What Is Medicare Part D?
Medicare Part D provides prescription drug coverage for enrollees. Enrollees who have Medicare Part A (hospital coverage) and Part B (medical insurance) coverage can purchase Medicare Part D coverage through private insurers approved by Medicare. Enrollees can also obtain Medicare Part D coverage through a Medicare Advantage (Part C) plan, which bundles Part A and Part B coverage. Many Medicare Advantage plans also include Part D coverage alongside additional coverage for dental, vision, and hearing care.
What Does Medicare Part D Cover?
Medicare Part D plans help cover the cost of prescription drugs approved by Medicare. Each Part D plan will have a formulary that lists the specific drugs it covers. All plans must cover certain protected classes of drugs, such as medications that treat cancer, HIV, depression, and epilepsy. In most cases, even if a Plan D formulary does not offer a specific drug, it will cover a similar drug, such as a generic or a drug with different ingredients that treat the same condition.
Part D plans can change their formularies during a plan year under certain guidelines, including when drug therapies change, pharmaceutical companies release new drugs, or new medical information about the efficacy or safety of drugs becomes available.
Medicare Part D coverage creates a tiered pricing structure based on the amount of copayment that an enrollee must pay for a drug:
- Tier 1: Lowest copayment, includes most generic prescription drugs
- Tier 2: Higher copayment than Tier 1, includes preferred brand-name drugs
- Tier 3: Higher copayment than Tier 2, includes non-preferred brand-name drugs
- Specialty tier: Highest copayment, includes the highest-cost brand-name prescription drugs
A patient and their physician can request an exception for a non-listed drug. Physicians who believe their patients need a higher-tier drug instead of a lower-tier one can also request an exception to secure the lower-tier copayment for the higher-tier drug.
How Medicare Part D Costs Work
There are various categories of costs under Medicare Part D coverage. First, enrollees will pay a monthly premium for coverage, regardless of whether or not they receive prescription drugs. An enrollee’s monthly premium will depend on the specific plan they purchase (and the drugs covered in the plan’s formulary) and the enrollee’s income. Individuals who enroll in Medicare Part D after the enrollment period will also pay a penalty added to their monthly premium.
When enrollees obtain prescription drugs, they may have to pay a copayment or coinsurance. A copayment requires an enrollee to pay a fixed dollar amount for a prescription drug. Coinsurance requires enrollees to pay a percentage of the cost of the drug.
Finally, Part D plans also have a deductible, which is the amount that an enrollee pays for prescription drugs and other covered items out-of-pocket before the plan begins covering costs. Medicare regulations set a maximum deductible for Part D plans, and many plans have no deductible at all. The deductible that an enrollee chooses may also affect their monthly premiums.
Medicare Part D plans have three coverage phases, which determine how much of the costs of prescription drugs the plan will cover:
- Deductible phase: For plans with deductibles, the enrollee pays all costs out of pocket until they reach their deductible.
- Initial coverage phase: After an enrollee reaches their deductible, they pay 25 percent of the cost of drugs until they spend up to a specified annual threshold.
- Catastrophic coverage phase: After reaching the specified annual threshold, the enrollee no longer has any out-of-pocket costs for drugs for the rest of the year.
Enrolling in Medicare Part D
Medicare has three enrollment periods:
- Initial enrollment: Joining Medicare for the first time or adding Part B
- Open enrollment: Occurs from October 15 through December 7, or January 1 through March 31 when enrolled in a Medicare Advantage plan
- Special enrollment: Applies in specific circumstances, such as moving to a new address, losing coverage, or qualifying for Medicaid
Contact Us Today
Many Medicare enrollees can benefit from having drug coverage through Medicare Part D. Contact Roses Insurance Group today to learn more about Medicare Part D and whether you should add a policy to your Medicare coverage. We serve Pima County, Southern Arizona, and beyond from our offices in Tucson, and we look forward to meeting you and answering your questions.