Medicare Part D is a federal program to subsidize the cost of prescription drugs for Medicare beneficiaries in the United States. This benefit is administered through private insurance companies which are then reimbursed by the Centers for Medicare and Medicaid Services (CMS). Part D plans only cover prescriptions, both generic and name-brand. No other benefits are provided with a Part D plan.
There are two options for obtaining a Medicare Part D Prescription Drug Plan (or PDP). You can opt for a PDP only, with no other coverage, or you can purchase a Medicare Advantage (MA) plan. A Medicare Advantage plan covers both medical services and prescription drugs. Within these two categories, there are many different companies and plans to choose from.
Keep in mind that each insurance company has its own list of covered medications. Therefore, it is crucial for you to make sure that you choose a plan that meets your needs by covering all or most of your recurring monthly prescriptions.
Cost for Medicare Part D Plan Coverage
- Medicare Part D has monthly premiums
Like Medicare Part B, Medicare Part D plans have monthly premiums. The premium will vary depending on which plan you choose, your location, which insurance company is offering the plan, and your income.
When paying the monthly premium, you have the option to have the payment automatically deducted from your Social Security check. The insurance company you choose can arrange this payment method. You can also choose to have the premiums automatically deducted from a checking account, or pay through the mail.
- Most Part D plans have annual deductibles
The deductible amounts on Medicare Part D plans also vary according to which plan you choose. The deductible is the annual dollar amount that you are required to pay before coverage kicks in. For 2014, the maximum allowable deductible for Medicare Part D is $310.
- Medicare Part D “Donut Hole”
Medicare Part D is infamous for its “donut hole” or coverage gap. Once you are in the donut hole, you are responsible for paying your prescription drug costs. However, there are discounts for both brand-name and generic drugs. Once you reach the True Out of Pocket (TrOoP) amount of $4,550 in 2014, your Part D plan will start covering your medications again.
However, once you are out of the coverage gap, you plan pays according to the Catastrophic Coverage Schedule. This means you are responsible for a maximum of $6.35 for brand name medications and $2.55 for generic ones.
The Affordable Care Act has made some changes to the Medicare Part D coverage amounts in an effort to reduce your prescription expenses while you are in the coverage gap. Once you reach the donut hole, you will receive a 52.5% (50% paid by the drug manufacturer and 2.5% paid by the Medicare Part D plan) discount on brand name drugs and 28% discount on generic drugs. These discounts will gradually increase until 2020. At that time, beneficiaries who are in the Medicare coverage gap will receive a 75% discount on all prescriptions, which will in effect close the gap.
Even though you only pay a portion of the cost for your prescriptions while in the donut hole, the original amount of the drug is applied to the TrOOP. This helps you get out of the coverage gap sooner.
When to Sign up for Part D Coverage – Enrollment Periods
You can enroll for Part D Prescription Drug Coverage when you become eligible at age 65, or during the open enrollment period.
- Annual Enrollment Election Period
The Annual Enrollment Election Period runs from October 15 through December 7 of every year. During this time, you may enroll in or change Medicare Prescription Drug Plans under the following qualifications:
You may enroll in only one Medicare Prescription Drug Plan at a time and may not be enrolled in a Medicare Advantage Plan at the same time. If you choose a Medicare Advantage Plan, your prescription drug coverage is included.
- You are entitled to Medicare Part A or are enrolled in Part B.
- Your permanent residence is within the United States.
- You must continue to pay your Medicare Part B premium, if not otherwise paid for under Medicaid or by another third party.
- You are not enrolled or do not plan to stay enrolled in another Medicare Prescription Drug Plan.
If you currently have a Medicare Supplement plan, you can also switch to a different plan during the Annual Enrollment Election period.
- Initial Enrollment Period
The Initial Enrollment Period is a seven-month period that includes the month during which you first become eligible (at age 65 or earlier if you qualify due to disability or end-stage rental disease) plus the three months before and the three months after the month in which you become eligible.
If you do not enroll during your seven-month Initial Enrollment period, you will have an opportunity to join a prescription drug plan every year from October 15 through December 7. However, if you enroll after the Initial Enrollment Period you will be assessed a late enrollment penalty.
The late penalty is currently 1% of the national average monthly premium for each month you were eligible but were not enrolled in a Medicare Prescription Drug Plan. The penalty will be added to your premium for as long as you are enrolled in Medicare's prescription drug coverage.
You can delay enrollment in Medicare's prescription drug coverage without paying a penalty if you have prior creditable coverage on an individual policy or through an employer group policy. Creditable coverage means you have a drug benefit that equals (or is better than) Medicare's standard prescription drug coverage.
- Special Enrollment Period
A Special Enrollment Period is available in certain situations, such as if you become disabled or move outside of the service area your plan provides. In these cases, you may enroll in or change Medicare Prescription Drug Plans at any time.
How to Save Money on Your Prescriptions
Since there is a late-enrollment penalty for delaying the purchase of a PDP, you may benefit from signing up for a Part D plan even if you are not currently on any medications. In this way, you can choose the least expensive plan in order to avoid the penalty, with the option of switching to a more comprehensive plan if your needs change.
Even you do not purchase a Medicare Part D plan, you can still benefit by being a smart consumer. Visit our page regarding How to Pay Less for Prescription Drugs and learn how to receive a free prescription drug discount card. We also provide information about how purchase your monthly recurring medications at reduced prices via international pharmacies.
Quotes and How to Apply
If you are interested in receiving a quote on Part D prescription coverage, we can research your options and help you make a decision regarding which plan is right for you. We are able to offer quotes from a variety of carriers, such as:
- Blue Cross Blue Shield
Before we are allowed to provide information on these plans, Federal law requires that you fill out a Scope of Appointment Form.
After submitting the form, you will be taken to a page where you provide information on which medications you take and the pharmacy you use. Once you have provided all of the requested information, we can obtain quotes and rate information designed for your specific situation.
If you are not comfortable with the online quote process, or if you have any other questions, please contact one of our MediGap Advisors at 866-323-1441. You may also e-mail us at info@MediGapAdvisors.com . Remember that our services are offered to you with zero cost and with no obligation. Our goal at MediGap Advisors is simply to help you understand your Medicare Part D Prescription Drug Plan and help you make informed decisions regarding your coverage.