What is Medicare Part D?
Medicare Part D plans, also know as Medicare Prescription Drug Plan (PDP), are run by Medicare-approved private companies. Medicare Part D was implemented into the Medicare program on January 1, 2006. This was a much needed change because with original Medicare Part A and Part B, prescription drug coverage was, and is still, very limited. A Medicare beneficiary’s enrollment in a Medicare Part D plan allows the Medicare beneficiary to have prescription drug coverage for an additional premium. Eligibility for enrollment by a Medicare beneficiary in a Prescription Drug Plan requires that the Medicare beneficiary be enrolled in original Medicare Part A or Part B (enrollment in both is not a requirement for a PDP). A Medicare beneficiary can enroll in a “stand-alone” Prescription Drug Plan with original Medicare Parts A and/or B, or the Prescription Drug Plan can be consolidated with a Medicare Advantage plan. However, enrollment in Medicare Advantage plan with a built in Prescription Drug Plan (also known as a Medicare Advantage Plan or “MAPD”) requires that the beneficiary be enrolled in both original Medical Part A and Part B.
Medicare Prescription Drug Plan (Part D)
Medicare offers prescription drug coverage to everyone with Medicare. Even if you don’t take many prescriptions now, you should consider joining a Medicare drug plan. If you decide not to join a Medicare drug plan when you’re first eligible, and you don’t have other creditable prescription drug coverage, or you don’t get Extra Help, you’ll likely pay a late enrollment penalty if you join a plan later. To get Medicare prescription drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in premium, specific drugs covered, participating pharmacies, copays, co-insurance, deductibles, and tiers, just to name a few of the differences.
There are 2 ways to get Medicare prescription drug coverage:
- Medicare Prescription Drug Plans. These plans (sometimes called "PDPs") add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) plans, and Medicare Medical Savings Account (MSA) plans.
- Medicare Advantage Plans (like HMOs or PPOs) or other Medicare health plans that offer Medicare prescription drug coverage. You get all of your Part A, Part B, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called "MA-PDs." Remember, you must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage.
In either case, you must live in the service area of the Medicare drug plan you want to join, and you must be enrolled in either Medicare Part A and/or Medicare Part B.
If you have employer or union coverage
Call your benefits administrator before you make any changes, or before you sign up for any other coverage. If you drop your employer or union coverage, you may not be able to get it back. You also may not be able to drop your employer or union drug coverage without also dropping your employer or union health (doctor and hospital) coverage. If you drop coverage for yourself, you may also have to drop coverage for your spouse and dependents.
If you have a Medicare Advantage Plan
If your Medicare Advantage Plan includes prescription drug coverage and you join a Medicare Prescription Drug Plan, you’ll be disenrolled from your Medicare Advantage Plan and returned to Original Medicare.
How much do I pay?
Below are descriptions of what you pay in your Medicare drug plan. Your actual drug plan costs will vary depending on:
- Your prescriptions and whether they’re on your plan’s formulary (drug list).
- The plan you choose.
- Which pharmacy you use (whether it offers preferred or standard cost sharing, is out-of-network, or mail order).
- Whether you get Extra Help paying your Part D costs.
Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B premium. If you’re in a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium may include an amount for prescription drug coverage.
Note: Contact your drug plan (not Social Security or the Railroad Retirement Board (RRB)) if you want your premium deducted from your monthly Social Security or RRB payment. If you want to stop premium deductions and get billed directly, contact your drug plan.
If you have a higher income, you might pay more for your Part D coverage. If your income is above a certain limit, you’ll pay an extra amount in addition to your plan premium. This doesn’t affect everyone, so most people won’t have to pay a higher amount.
This is the amount you must pay before your drug plan begins to pay its share of your covered drugs. Some drug plans don’t have a deductible.
Copayments or coinsurance
These are the amounts you pay for your covered prescriptions after the deductible (if the plan has one). You pay your share and your drug plan pays its share for covered drugs. These amounts may vary.
Most Medicare drug plans have a coverage gap (also called the "donut hole"). The coverage gap begins after you and your drug plan together have spent a certain amount for covered drugs. In 2015, once you enter the coverage gap, you pay 45% of the plan’s cost for covered brand-name drugs and 65% of the plan’s cost for covered generic drugs until you reach the end of the coverage gap. Not everyone will enter the coverage gap because their drug costs won’t be high enough.
These items all count toward you getting out of the coverage gap:
- Your yearly deductible, coinsurance, and copayments
- The discount you get on covered brand-name drugs in the coverage gap
What you pay in the coverage gap
The drug plan premium and what you pay for drugs that aren’t covered don’t count toward getting you out of the coverage gap.
Some plans offer additional cost-sharing reductions in the gap beyond the standard benefits and discounts on brand-name and generic drugs, but they may charge a higher monthly premium. Check with the plan first to see if your drugs would have additional cost-sharing reductions during the gap.
In addition to the discount on covered brand-name prescription drugs, there will be increasing coverage for brand-name and generic drugs in the coverage gap each year until the gap closes in 2020.
Once you get out of the coverage gap, you automatically get "catastrophic coverage." With catastrophic coverage, you only pay a small coinsurance amount or copayment for covered drugs for the rest of the year.
Note: If you get Extra Help, you won’t have some of these costs.
If you have specific questions about Medicare, Contact Us or visit www.medicare.gov to find the answers you need. You can also call 1-800-MEDICARE (1-800-633-4227), TTY users should call 1-877-486-2048.
Source for information - Medicare & You (Revised December 2014)