Get to Know Part D: Prescription Plans
Medicare Part D is managed by private insurance companies and helps cover the cost of prescription drugs. You can add on drug coverage through a standalone Part D plan, or you can purchase a Medicare Advantage (Part C) plan that includes drug coverage.
HOW DO I ENROLL IN A PART D PLAN?
You can enroll in a Part D plan during your Initial Enrollment Period (IEP) or Special Enrollment Period (SEP). We recommend enrolling as soon as you’re eligible to avoid Part D late penalties.
You can enroll in a plan directly with a private insurance company, usually over the phone, in-person or online. An agent or broker can also help you sign up for a plan. Part D members can change plans each year during the Annual Enrollment period from October 15 to December 7.
What are the penalties for enrolling late in Part D?
You will have to pay a higher monthly premium if you don’t enroll in Part D during your Initial Enrollment Period (IEP), unless you qualify for a Special Enrollment Period (SEP). This penalty is calculated based on how many months you were eligible for Part D coverage but did not enroll.
What does Part D cover?
Your prescription drug coverage will depend on which plan you choose. There is a standard level of coverage that every drug plan must provide, but plans can differ in what prescription drugs they cover and their copays, as well as how they structure the “tiers” of drugs in their lists, also called drug formularies. Typically, a drug in a lower tier will cost less than a drug in a higher tier.
Decoding Your Part D Drug Formulary
Tier
1
Preferred Generics
Tier
2
Generics
Tier
3
Preferred Brands
Tier
4
Non-Preferred
Tier
5
Specialty
Does Part D cover brand name prescriptions?
Part D prescription drug coverage depends on each insurance company and each plan. You should review the plan’s drug formulary before choosing a plan if you are concerned about a specific drug and its cost.
How much will my Part D plan cost?
Your Part D insurance provider will help cover part of your drug costs, but you may have to pay a monthly premium, along with other costs, such as an annual deductible. Some of your prescriptions may require you to pay out-of-pocket costs like a copay or coinsurance when you fill them.
What is the donut hole?
The “donut hole” is another name for the coverage gap in your Part D plan. In all Part D plans, there is a temporary limit on coverage after you and your insurance provider combined have spent $4,020 (in 2020). When you reach this limit, you enter the donut hole and will pay more for your drugs.
For generic drugs, Medicare will help pay part of the cost while you are in the donut hole. For brand-name prescription drugs, you’ll pay no more than 25% of the plan’s cost. Once total costs reach a certain amount ($6,350 in 2020), you will exit the gap. After the gap, you enter the “catastrophic coverage” stage and you’ll pay lower copays for the rest of the year.
the donut hole explained
Paying Your Deductible
Paying Your CoPay Or CoInsurance
Once You And Your Plan Reach $4,020
The Coverage Gap (The Donut Hole)
Once You Reach $6,350
Catastrophic Coverage
* These amounts only apply to 2020 coverage. The limits will change from year to year.
What’s the difference between a copay, deductible, and coinsurance?
While your insurance plan will pay for part of your coverage, you will likely also have to pay additional out-of-pocket costs through one of these methods:
- Copay: A preset amount you pay at the time you receive care. Copays vary from plan to plan. For example, you may have a $25 copay when you visit your primary care doctor.
- Deductible: This is the total amount of money you pay for qualifying services before your benefits kick in. For example, you pay $500 per year before your insurance provider starts covering costs.
- Coinsurance: Coinsurance is when you pay a percentage of your medical bill and your insurance covers the rest. For Medicare Part B, after you meet your deductible you will pay 20% of each medical bill and Medicare will pay the remaining 80%.
Each insurance plan has different types of payments and amounts you’ll owe, so we recommended reviewing these costs before you choose your coverage.
IS A PRESCRIPTION DRUG PLAN RIGHT FOR ME?
If you need drug coverage, we recommend taking a close look at your prescription drug plan options. Remember, prescription drug coverage is not included in Original Medicare. You can get a stand-alone Part D plan or purchase a Medicare Advantage (Part C) plan that includes Part D.
