Medicare Part D
Prescription drug coverage is available to all Medicare beneficiaries. Obtain it means joining a plan administered by a Medicare-approved insurance company within 63 day after your Initial Medicare Enrollment period ends.
You or your senior loved one can join a Medicare Prescription Drug Plan (Part D or "PDP") during Initial, Yearly or Special Enrollment Periods. You should strongly consider joining a plan whether you feel you need it or not. The reason is because if you decide not to join one, and don’t have other “creditable” prescription drug coverage, or receive “Extra Help”, you will be subject to a late enrollment penalty.
Folks who don’t feel they need prescription drug coverage may consider this to be unfair however, Medicare is trying to get as many beneficiaries into a PDP as possible in order to ”spread the risk” using the “law of large numbers” and hold down costs as much as
Side Note: This is the way all types of insurance works – carriers need as many healthy people in their group as possible. By having large numbers of premium-paying members who rarely submit claims, it helps to stabilize the pool of money used for paying the claims of the “unhealthy” members. (I.e., if only the “unhealthy” were insured, they’d hardly be able to afford the premiums or the company would go out of business.)
How much is the Part D Late Enrollment Penalty?
This depends on how long you went without creditable Prescription Drug coverage. The penalty is calculated by multiplying 1% of the “national base beneficiary premium” (NBBP) times the number of months you were eligible but did not join a Medicare drug
plan. The base premium can also increase each year, as can the penalty amount.
Hypothetical Example: If you delayed enrolling in a Part D plan for one year, you could incur a permanent penalty premium increase of $3.84 a month. (This hypothetical example would be if the NBBP was = $32.00 x 1% = $.32 x 12 months = $3.84.)
Tip: To avoid this penalty and save money in the long-run, consider enrolling in a PDP when eligible. You could always purchase a lower-premium plan initially, then upgrade later during an Annual Open Enrollment Period should your needs change in the future.
Unfortunately, as we age, prescription medications typically become a part of our daily routine…
How to Obtain Medicare Prescription Drug Coverage
Purchase a Stand Alone Medicare Prescription Drug Plan (“PDP” or Part D) that adds drug coverage to Original Medicare (Part A and Part B). You will find many Medicare-approved insurance companies that provide coverage in each state.
*It’s important to know that if you currently have a Medicare Advantage Plan that includes prescription drug coverage and you join a Medicare Prescription Drug Plan, you will be automatically disenrolled from your Medicare Advantage Plan and returned to Original Medicare. So always be careful when making changes and seek qualified advice if needed.
What You Pay for Medicare Drug Coverage
Monthly PDP premiums will vary by plan and could also be higher based on your income. Premiums can also be set up to be deducted from your monthly Social Security payment.
This is the amount you must pay out-of-pocket each year for your prescriptions before your Medicare drug plan begins paying its share. Deductibles vary between plans but can never be higher than $405 in 2019, as set by Medicare.
This is the amount that you must pay for each of your prescriptions after you have paid the deductible (“cost sharing”). Some plans have different levels or “tiers” of coinsurance or copayments, with different costs for different types of drugs.
This means you pay a percentage of the cost of the drug (for example, 25%). With a copayment, you pay a set amount for all drugs on a tier (for example, $10). You’ll typically pay a lower copayment for generic drugs than brand-names.
Costs incurred in the Part D Coverage Gap (Donut Hole)
Most Medicare drug plans have a coverage gap (often called the “donut hole”). This is a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. For more information on the Part D coverage Gap, click here.
What Prescription Drugs the Part D Plans Cover
Each PDP has its own list of covered drugs, called its “formulary”. Most plans categorize and place the drugs into different “tiers” in their formularies. Drugs in each tier have different out-of-pocket costs. As such, it’s important to check to make sure that your medication is on the plan’s formulary and which tier it falls into – and then compare your out-of-pocket costs to other plans.
Tip: The first time you use your new prescription drug plan you’ll need to bring your red, white, and blue Medicare card, a photo ID and your plan membership card with you to the pharmacy. If you have both Medicare and Medicaid or qualify for Extra Help with drug plan costs, you should also bring proof of your enrollment in Medicaid or proof that you qualify for Extra Help.
Other popular ways to save money on prescription drugs
Always ask your doctor if there is a good generic drug available in lieu of the name brand he or she is prescribing.
Try to purchase 90 day supplies instead of monthly.
Use your plan’s mail-order pharmacy for 90 day supplies (delivered right to your door).
Speak with your doctor about the feasibility of increasing dosages for tablets that can be split – this can almost “split” your drug costs in half.
These are the typical costs throughout the year:
Copayments/coinsurance for service
Costs if you get Extra Help
Costs during the coverage gap (see below)
Costs if you pay a Late Enrollment Penalty
Your actual drug plan costs will vary depending on:
The drugs you use
The plan you choose
Whether the drugs are on your plan’s formulary
Whether you go to a pharmacy that is in your plan’s network
Whether you get Extra Help paying your Part D premiums and costs