Medicare Part D

Medicare Part D

Also referred to as the Medicare prescription drug benefit, Medicare Part D is a US federal government program to subsidize the expenses of prescription drugs and their insurance premium for Medicare beneficiaries. The “D” stands for drugs, and the program is designed to offer Medicare recipients the following basic options:

• Stay in conventional Medicare without enrolling in a drug prescription drug benefit highlighted in the Act.
• Stay in conventional Medicare and sign up for a Medicare drug plan
• Sign up for a detailed private health plan
• Sign up for other Medicare plans

Individuals who sign up for Medicare Part D can choose from a diverse list of approved drug plan options. None of which cover all prescription drugs.

Many PDP Plans have Deductibles, and most plans have initial coverage amounts, then you fall into the GAP, and ultimately if you use many expensive medications you may find yourself benefiting from catastrophic coverage. Details vary from plan to plan. Call us for details.

There are a few plans that have no deductible.

Medicare Part D is coverage for prescription drugs that you can acquire from a retail chemist. This voluntary plan enables you to get access to medications at a more reasonable cost and also provides insurance against catastrophic drug expenses. You don’t sign up for Part D through Social Security. Instead, you opt for a Part D program offered by a private insurance provider.

Monthly Premiums for Part D

The monthly premiums for Medicare Part D differ depending on the particular plan opted. Every insurance company’s rate will vary based on its own policy. For 2023, plan monthly premiums start as low as $12.20. Each insurance company determines its own formula of drugs covered by the plan, and can thus decide on what monthly payment they will charge for the plan every year. In addition, people who are ‘high-income wage earners’ may be required to pay a substantial additional premium to subsidize lower income individuals.

Keep in mind that it is best to opt for a plan with a formula that provides the prescription drugs you need. When you enroll in the cheapest program without researching the plan’s formulary, you might later find out that the plan doesn’t cover one or more of your medications. 

What Qualifies You To Enroll in a Medicare Part D

You become eligible for Part D if:

• You already have Medicare Part A and/or B
• Your residence is in the service area of a Part D Plan.

Finally, be aware that your plan may change its formulary. You may want to review the Annual Notice of Change that the plan sends you every fall to make sure it will still cover your prescription medications in the coming year. Coverage generally follows this pattern:

If the Prescription Drug Plan has an annual deductible, you pay the full amount of your prescription drug purchases until the deductible is met.

After you satisfy the annual deductible, you will pay a share of the costs according to the terms and structure of your plan. Your share, which you typically pay to the pharmacy at the time of pickup, could be a flat amount (copayment) or a percentage of the total amount (coinsurance).

Once you have paid a certain annual maximum amount out of your own pocket for prescription drugs, you automatically get “catastrophic coverage.” This means for the rest of that particular year, you would only pay a small copayment or coinsurance amount for prescription drugs.

Filling the coverage gap

You may have heard of the Medicare coverage gap (also called the “donut hole”) but aren’t clear on how it works. After your Medicare Part D coverage has paid a certain amount for prescription drugs, you may have to pay all costs yourself, up to a yearly limit. This temporary limit on what your Medicare Prescription Drug Plan will pay for covered drugs is the coverage gap. The coverage gap applies to both stand-alone Medicare Prescription Drug Plans and Medicare Advantage Prescription Drug Plans.