Medicare Part D is your prescription drug coverage.
Part D encompasses all prescription drug plans. Medicare beneficiaries can purchase a stand-alone Part D plan or choose one bundled into a Medicare Advantage plan.
What is Medicare Part D?
Medicare Part D is the final part of the Medicare program. Part D encompasses all prescription drug plans. Medicare beneficiaries can purchase a stand-alone Part D plan or choose one bundled into a Medicare Advantage plan.
You’ll pay a monthly premium for your Part D plan, as well as a copay for prescriptions.
How does Medicare Part D work?
There are four pieces of every Part D plan that you need to be aware of.
Each plan dictates its deductible, but none can exceed $445 as of 2021. (This can change each year.) Even if you have not met your deductible, you will still get a discounted price for your medications. Once you have completed your annual deductible, your initial coverage begins.
While in the initial coverage phase, you will pay a copay for each medication. Your plan’s formulary sets that copay. The model is split into tiers – the higher the tier, the higher the copay. Generic, common drugs fall in lower levels while specialized, brand-name drugs fall in higher tiers.
The limit of your initial coverage is $4130 as of 2021. Once you and your carrier have spent that amount on medications, you will fall into the Coverage Gap.
The Coverage Gap
This is often referred to as The Donut Hole. While you will still benefit from discounted medications during this phase, you will pay about 25% more for brand-name medications and 37% more for generic ones.
You’ll stay in this gap until your out-of-pocket expenses reach $6550 (as of 2021). At that point, you’ll roll into catastrophic coverage.
Once you’re out of the coverage gap, your plan will pay for 95% of the cost of your prescription medications, as long as the formulary covers them. This will last until your benefit year ends.
How to enroll in a Prescription Drug Plan
You are eligible to enroll in a Part D plan as soon as you have enrolled in Medicare Parts A and B. This Initial Enrollment Period begins three months prior to your 65th birthday and extends to three months following your 65th birthday.
The Annual Election Period occurs each fall from October 15 to December 7. During this time, you may choose to change your Part D plan. This is a crucial enrollment period. In September, you will receive an Annual Notice of Change from your Part D carrier. This describes any changes occurring in your policy. Review this carefully, as there are often modifications that may negatively impact your situation.
If you decide you want to keep your current policy, no action is required. Your plan will renew automatically in January.