Medicare Part D Drug Coverage
What is Medicare Part D?
Medicare Part D is prescription drug coverage for Medicare. It helps cover prescription medication costs and can also include vaccines.
How Does Medicare Part D Work?
Medicare Part D provides access to prescription drugs with affordable copays. Before Medicare Part D came out, Medicare recipients paid for most medicines out-of-pocket, since Medicare Part A and Part B did not cover all drug costs.
Medicare Part D in a glance:
- Private insurance companies operate and process claims for Medicare Part D plans.
- Includes coverage for both generic and brand-name drugs.
- Has four tiers of coverage. The tier determines how much of the drug cost that Plan D will cover.
- The costs depend on which Plan D you choose, your medication needs, and preferred pharmacy.
- Compare plans each year because lists of cover drugs change, as well as costs
How Do I Get Medicare Prescription Drug Coverage?
You should enroll in Medicare Part D when you sign up for Medicare Part A and Part B. If you postpone registration, you may pay a higher price indefinitely.
Medicare insurance marketplaces like AARDY offer Medicare Part D plans at affordable prices.
If you have a Medicare Supplement, you will buy a standalone Medicare Part D drug plan. Medicare supplements are not allowed to include Part D.
However, if you buy a Medicare Advantage plan, it might include prescription drugs already. If you have a Medicare Advantage plan, Part D is redundant, and you would need to drop the standalone program. If you don't, the Medicare Advantage plan might disenroll you.
What Does Medicare Part D Cover?
Part D plans have a list of covered prescription drugs, called a formulary. This list may vary depending upon which provider covers you.
If the drug you use isn't on your plan's formulary, you pay full retail price instead of a copayment or coinsurance. In some instances, you may qualify for a formulary exception.
One advantage that Medicare offers is that they negotiated lower medication prices, so using drugs on the formulary saves you money. Also, generic drugs cost less than brand-name drugs.
How Much Does Medicare Part D Insurance Cost?
Regardless of where you get Part D coverage, you will pay a monthly premium. Depending on your annual income, you would pay the plan's premium plus an additional monthly fee. However, if your individual annual income is less than $87,000, or joint annual income is less than $174,000, you would not pay any additional monthly fee.
Each plan also has a deductible of $435 or less that you must meet. Fortunately, some programs have $0 deductible.
After you pay the deductible, you have copays and coinsurance. An example of a copay is picking up a monthly drug refill and paying a flat $10 per prescription regardless of cost. Coinsurance means you pay a percentage of the total drug cost, like 20%.
Your costs depend on several factors:
- Which plan you choose – this affects your premium and out-of-pocket costs like copays
- Which drugs you need
- If your plan covers the drugs you need
- Whether you use a pharmacy in your network
How Much Does Medicine Cost with Medicare Part D?
Prescription drug coverage works on a tier system. Low-tier drugs cost the least, and high-tier drugs cost the most.
- Most generic drugs are on Tier 1, the lowest, and have a small copayment.
- Preferred brand name prescription drugs fall under Tier 2, and you pay a higher copayment.
- Brand name drugs that are not preferred by the plan are in Tier 3, and you'll pay a higher copay yet.
- Finally, Tier 4 prescription drugs have the greatest copayment.
Sometimes you can file for an exception. Your physician may believe you need a drug from a higher tier, but there is a similar drug on a lower tier. However, the higher tier drug is more appropriate for your condition. You would file for an exception to ask for a lower copayment.
This coverage system can vary from plan to plan.
Does Medicare Part D Work with Other Insurance?
Depending on your coverage, Medicare Part D may be the primary payor or the secondary payor.
Part D works with COBRA, Medicare supplements, Medicaid, supplemental security income benefits, state pharmaceutical assistance programs, long-term care facilities, HUD housing assistance, food stamps, Federal Employees Health Benefits (FEHB), veteran's benefits, TRICARE, Civilian Health and Medical Program of the Department of Veteran Affairs (CHAMPVA), and Indian health services.
If you have drug coverage through your employer's health plan, you may not need Part D until you retire.
How to Enroll in Medicare Part D
Although Medicare does not require that you enroll in a Part D drug plan, they will charge late penalties if you wait to register. We recommend signing up when you are first eligible for Medicare.
If you currently have a Part D plan, Medicare permits changes during the Annual Enrollment Period. This occurs between October 15 and December 7 each year.
Since Part D plans can change their benefits and formulary each year, it's wise to review other plan options each fall. Even if your doctor does not change your medications, you may save money on a different program. However, if you like your policy, it will automatically renew at the end of the year.
Where Can I Get Help Choosing a Medicare Part D Plan?
AARDY is the nation's fastest Medicare insurance marketplace. You can compare Medicare supplements, Medicare Advantage, and Part D prescription plans to find the one that best fits your needs.