Medicare Part D is a federal prescription drug plan administered through private insurance companies. Medicare beneficiaries can enroll in a standalone Part D drug plan that either supplement their Original Medicare or they can choose a Medicare Advantage plan that also features prescription drug coverage. The cost of Medicare Part D depends on your income, which plans you choose, and if you qualify for Extra Help. It is important for seniors that are not taking any medications to still consider enrolling in a Part D prescription drug plan to avoid penalty in the future. You are penalized 1% for every month that you were eligible for a prescription drug plan and did not enroll.
How does Medicare Part D work?
There are 4 stages of the Medicare Prescription drug plan. Your out-of-pocket costs in Part D plans depend on which coverage phase you are in.
- Annual Deductible— There is a deductible you must pay for a Part D plan. Your deductible may be different, or waived entirely, depending on the plan you chose. You will pay a discounted price for your medications until you have satisfied the deductible. After that, you begin initial coverage.
- Initial Coverage— During initial coverage, you pay a copay for your medications based on your plan’s formulary. Each prescription drug plan separates its medications into tiers. Each tier has a copay amount for which you are responsible.
- The Coverage Gap– Also known as the DONUT HOLE. During the coverage gap, you will still generally have significant discounts for generic medications, but it is the stage where you have the least coverage. Typically, you will pay 25% for your medications
- Catastrophic Coverage– If you should spend past the coverage gap, your plan will begin to pay 95% of the costs of your formulary medications for the rest of the year.
How Do I Reduce My Drug Cost?
- Talk to your doctor about prescribing lower-cost alternative medication when possible.
- Use generics and over-the-counter options as an alternative to brand-name medications.
- Use your plan’s preferred pharmacy network or use your plan’s mail-order pharmacy
- Use free discount program cards and coupons like goodrx.com
- Research a specific drug manufacturer’s Prescription Assistance Program
Extra Help for Part D Costs
The federal government awards help for Part D expenses if you have a low income and limited resources. To see if you qualify, or to apply, contact your local Social Security office.
