Medicare Part D Overview
Medicare Part D helps you pay for prescription drugs. You are not required to enroll in it but like Part B, you will pay a penalty if you don’t sign up for it when you are first eligible unless you can prove you have had credible coverage that is “at least as good as Medicare”
Most individuals enrolled in original Medicare (Medicare Part A and Medicare Part B) also purchase a separate Medicare Part D plan to cover their prescription costs.
Most Medicare Advantage (Medicare Part C) plans include prescription drugs. You do not need and can not purchase a separate drug plan with most Medicare Advantage plans.
Medicare Part D by itself is often called a standalone prescription drug plan or PDP.
Medicare Part D Basics
Medicare Part D has 4 stages of coverage:
- Deductible – What you pay before the plan contributes This changes yearly and many Part D plans waive the deductible.
- Initial Coverage Limit – What you and the plan combined pay for your coverage. The standard Part D cost sharing is 25%/75% where you pay 25% and the plan pays 75%. This amount changes every year. Some plans cover these costs in Tiers based upon the cost of the medication.
- Coverage Gap – The coverage gap begins after you and your drug plan have met the initial coverage limit. You pay a percentage of the cost of either brand name or generic drugs until you reach the TROOP
- Catastrophic Coverage – Once you get out of the coverage gap, you automatically get “catastrophic coverage.” It assures you only pay a small coinsurance amount or co-payment for covered drugs for the rest of the year.
Like Medicare Part C (Medicare Advantage), Medicare Part D is offered by private insurance companies. The federal government regulates the available options and ensures each plan has coverage for the needs of Medicare beneficiaries. The costs and formularies (a list of covered drugs) vary from plan to plan and change yearly.
Next, let’s talk about Medicare supplement insurance, also called Medigap insurance, what happens when you need long-term health care, and how the Affordable Care Act impacts Medicare.