What is Medicare Part D

What is Medicare Part D; how does it work:

1. There is a Deductible

   Medicare allows a  part D deductible of $480 (2022) per year.  Remember, this number changes each 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.  In addition,  you will pay the network discounted price for your prescriptions.

2. 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.  Additionally, 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.

3. 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.  However, they do not count contributions made by the federal government.

4. 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.

What is Medicare Part D; important:

Some medications are not covered by Part D.  However, 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.