Medicare Part D
Medicare Part D is a federal program that provides prescription drug coverage to people with Medicare. It is offered by private insurance companies, and individuals can choose from a variety of plans. Part D plans have different costs and cover different drugs, so it is important for individuals to carefully review their options and choose a plan that best meets their needs. Enrollment in Part D is optional, but individuals who do not enroll when they are first eligible may be subject to penalties if they enroll later.
Medicare Part D Coverage
Medicare Part D provides coverage for prescription drugs for individuals enrolled in Medicare. Some benefits of Medicare Part D include:
- Access to a wide range of prescription drugs
- Lower out-of-pocket costs for prescription drugs
- Protection against high prescription drug costs
- Coverage for both brand-name and generic drugs
- Convenient options for obtaining prescription drugs, such as through a pharmacy or mail-order service
- Access to a network of participating pharmacies
- Coverage for preventive drugs at no extra cost
- Annual open enrollment period that allows individuals to change their coverage if they wish
However, Part D formularies do not contain dietary supplements, hair loss treatments, weight loss and weight control drugs, and over-the-counter medications.
Part D Tier Systems
Medicare Part D plans to use a tiered system to classify prescription drugs. Each tier has a different cost-sharing amount, and the tier placement of a drug can affect the out-of-pocket cost for the patient.
The most common tier system are:
- Tier 1: Generic drugs, which typically have the lowest cost-sharing amount.
- Tier 2: Preferred brand drugs, which typically have a higher cost-sharing amount than generic drugs.
- Tier 3: Non-preferred brand drugs, which typically have a higher cost-sharing amount than preferred brand drugs.
- Tier 4: Specialty drugs, which typically have the highest cost-sharing amount and are often used to treat complex or rare conditions.
- Tier 5: Specialty drugs
Tiers are listed by increasing price, meaning that tiers 1 and 2 are the least expensive drugs on the list. Tier 3 will cost less than tier 4 because it is preferred, but for both tiers, however, you can expect to pay more out-of-pocket than the first 2 tiers.
It’s important to note that each plan can have different tiers and different drugs in each tier, so it’s important to check the specific plan’s formulary and the cost-sharing for each drug before enrolling.
Tier 5 covers specialty prescription drugs and is the most expensive on the list. With this tier, there are no brand-name, generic, preferred or non-preferred options. They are targeted towards very specific ailments, which is why they are called “specialty” drugs.
For drugs in this tier, you will also pay 45-50% of the total cost, like for drugs in Tier 4. However, unlike Tier 4, these prescriptions cost more overall, raising the price of your percentage contribution.
Costs of Medicare Part D
The cost of Medicare Part D coverage can vary depending on the specific plan that an individual chooses.
The costs associated with Medicare Part D coverage include:
- Monthly premium: The monthly fee that individuals pay to have prescription drug coverage. This amount can vary depending on the plan and can change each year.
- Deductible: Some plans have a deductible, which is a set amount that must be paid before the plan begins to cover the cost of drugs.
- Copayments or coinsurance: The amount that individuals pay out-of-pocket for each prescription can vary depending on the drug and the plan.
- Coverage gap (also known as the “donut hole”): Once total drug costs, including the individual’s and the plan’s share, reach a certain amount, the individual will enter the coverage gap. While in the coverage gap, individuals may pay a higher amount for their drugs.
- Catastrophic coverage: After an individual has spent a certain amount on drugs, catastrophic coverage kicks in and the individual will pay a much lower amount for their drugs.
Additionally, there are also additional costs for those who enroll late, and also for those who exceed certain income limits.
It’s important to note that these costs can change each year, and it’s important to review your coverage and costs when open enrollment comes around.
Part D Enrollment
The initial enrollment period for Medicare Part D is the same as the initial enrollment period for Original Medicare (Parts A and B).
For most people, the initial enrollment period begins three months before they turn 65, includes the month they turn 65, and ends three months after they turn 65. However, there are other opportunities to enroll in Medicare Part D coverage if you didn’t enroll during your initial enrollment period.
General Enrollment Period: The general enrollment period for Medicare Part D runs from January 1 to March 31 each year. If you enroll during this period, your coverage will begin on July 1 of that year.
Annual Enrollment Period (AEP): The Annual Enrollment Period (AEP) for Medicare Advantage and Medicare Part D runs from October 15 to December 7 each year. During this period, you can enroll in a Medicare Advantage plan, switch from one Medicare Advantage plan to another, or switch from Original Medicare to a Medicare Advantage plan.
Special Enrollment Period (SEP): Special Enrollment Periods (SEPs) allow you to enroll in or make changes to your coverage if you have certain life events, such as moving to a new area, losing other coverage, or qualifying for Extra Help.
It’s important to note that if you didn’t enroll in a Medicare Part D plan when you were first eligible, and you don’t have other creditable prescription drug coverage, you may have to pay a late enrollment penalty (LEP) if you decide to enroll in the future.
Part D Eligibility
To be eligible for Medicare Part D, an individual must:
- Be entitled to Medicare Part A (hospital insurance) and/or enrolled in Medicare Part B (medical insurance).
- Live in the service area of a Medicare Part D plan.
- Not have creditable prescription drug coverage that is as good as Medicare’s coverage.
Most people who are enrolled in Original Medicare (Parts A and B) are eligible for Medicare Part D. However, there are some exceptions, such as people who are in jail or are in certain Medicare Advantage plans that provide drug coverage.
Additionally, certain individuals may be eligible for extra help paying for the costs of Medicare Part D coverage, including:
- People with limited income and resources
- People with certain Medicaid coverage
- People with certain Medicare Savings Programs
- People who receive assistance from their state Medicaid program
It’s important to note that eligibility can change based on your current situation, so it’s important to check your eligibility and coverage options regularly.