What is Medicare Part D
If you are thinking about signing up for Medicare, you will need to ask the question; What is Medicare Part D. Medicare Part D is prescription drug insurance. This insurance will cover your medication needs. If you choose a Medicare Part D plan, you will pay a monthly premium to an insurance carrier for your coverage. The insurance carrier will send you an ID card to use at your insurance provider’s network of pharmacies to fill your prescriptions. In most cases you will not pay full retail price for your medication, you will pay a copay (a percentage of the drug’s price). The insurance carrier pays the remaining balance.
The federal government controls the Medicare Part D program:
Medicare Part D is administered through private insurance companies. These companies provide beneficiaries prescription drug coverage. This program began in 2006 and offers Medicare recipients a valuable benefit that saves them thousands of dollars on medication each year. Beneficiaries can choose 2 ways to receive this benefit.
- They can enroll in a standalone prescription drug plan along with a Medigap/Medicare Supplement plan.
- They can choose a Medicare Advantage(Part C) plan that includes prescription drug coverage.
All Medicare Part D plans must follow guidelines set by the federal government. This means, every insurance carrier who participates must submit it’s plan to the CMS/Centers for Medicare and Medicaid Services. The carriers have to do this every year to have their plans approved before they can offer them to clients.
What is Medicare Part D; how does it work:
There is a Deductible
Medicare allows a part D deductible of $415 per year. Some plans charge the entire allowable Part D deductible amount. Although, other plans will either charge a portion of the deductible or waive the deductible entirely. You do not start the initial coverage period until you satisfy your plans deductible. Although you will pay the network discounted price for your prescriptions.
The Initial Coverage period
Once you enter this stage of your Part D coverage, you pay only the copay for your prescriptions. The copay amount is determined by the plan’s formulary. Every carrier has a drug formulary they use to decide the cost you pay for your medication based on a system of tiers. Tier 1 is used for generic medications and usually has a low to no co-pay amount. When you get into each higher tier the copay amount tends to go up. Every year there is a set spending limit amount. Your insurance company will keep track of the amount spent by you and the insurance company. Once the total amount spent reaches the yearly limit (in 2019 it is $3820) you have reached your coverage gap and your coverage goes to the next level.
The next level is the coverage gap
You will enter this level after you reached the initial coverage limit for the year. This is the coverage gap level. Once you hit the coverage gap for the year, the price you pay for brand name prescriptions goes to 25%. The cost for generics goes to 37%. You will remain in the coverage gap level until your out of pocket drug costs reach the annual limit. In 2019 the limit is $5100. You should be aware that to get into the gap, Medicare tracks the total amount you and the insurance company have spent. Medicare only counts the amount you pay in deductibles, co-pays and gap spending for the year as well as manufacturer discounts, to get out of the coverage gap. They do not count contributions made by the federal government.
Final level is catastrophic coverage
Once you reach the maximum amount for the coverage gap, your enter into the catastrophic coverage level. At this level, your insurance plan will pay 95% of the costs of your medications for the rest of the year. As long as they are on the formulary. This coverage will be very helpful if you have expensive medications.
Some medications are not covered by Part D. If you use a medication that is not on your plan’s formulary, you can ask our provider to file an exception. Sometimes this can help you get your prescription approved. If your drug is not approved, you will have to pay the total cost for your prescription.
Each year the drug plan providers make changes to benefits; this includes the formulary, in network pharmacies, providers as well as costs. The changes go into effect on January 1st. Be sure to check your coverage during open enrollment every year. This is important if you need to change your insurance provider. If you do not check, it could end up costing you a lot.
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If you need help finding the right plan for you, please contact us either by phone at (203)796-5403 or by email at [email protected]