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Medicare Part D: Drug Plans

What is Medicare Part D?

Simply put, Medicare Part D was created to offset the expensive medication costs that Medicare patients endure. Insurance companies will provide you with a network of pharmacies that provide medication at a discounted price in exchange for a monthly premium that you pay.

What does Medicare Part D Cover?

Part D covers a portion of the cost of your medications. Each Medicare Prescription Drug Plan has a formulary available on the company's website. A formulary is a list of prescription drugs that are covered by the private company. Because there are many Part-D plans, and each offers coverage for different prescription drugs so it is important to work with a professional to find out which plan will cover your medication expenses.

What medications are NOT covered by Medicare Part D?

Not all types of medications are covered through Part D. A few that are not covered are:

  • Over the counter drugs
  • Weight altering drugs
  • Cosmetic drugs
  • Fertility or sexual dysfunction drugs

Who is eligible for Part D coverage?

Anyone who is enrolled in Medicare Part A or Part B or both are eligible for Medicare Part D coverage.

You must live in the service area of your Medicare Part D plan provider

How much does Medicare Part D cost?

Like most insurance policies, Medicare Part D has a monthly premium that is set by your insurance provider. However, this is not the only cost that you pay if you purchase a Part D policy. While your health insurance provider will cover the costs of the medication you are still responsible for copayments or percentage of the total cost of each medication. Medicare Part D is a great solution that saves individuals hundreds in medication expenses every year but still requires a little out of pocket payment.

Your actual drug plan costs will vary depending on:

  • The drugs you use
  • The plan you choose
  • Whether you go to a pharmacy in your plan's network
  • Whether the drugs you use are on your plan's formulary
  • Whether you get Extra Help paying your Medicare Part D costs

There are four different phases—or periods—of Part D coverage:

Deductible period:

Until you meet your Part D deductible, you will pay the full negotiated price for your covered prescription drugs. No plan's deductible can be higher than $435 in 2020, and some plans have no deductible.

Initial coverage period:

After you meet your deductible, your plan will help pay for your covered prescription drugs. The initial coverage period ends after you have accumulated $4,020 in total drug costs.

Coverage gap:

After your total drug costs reach a $4,020 you enter the coverage gap, previously known as the donut hole. When you enter the coverage gap you will be responsible for 25% of the cost of your drugs.

Catastrophic coverage:

In all Part D plans, after you have paid $6,350 in out-of-pocket costs for covered drugs (this amount is just the amount you have paid, not the total drug costs that you and your plan have paid), you reach catastrophic coverage. During catastrophic coverage, you will pay 5% of the cost for each of your drugs, or $3.60 for generics and $8.95 for brand-name drugs (whichever is greater).

Medicare Part D Formulary Tiers

Formularies are categorized into cost-sharing tiers that are numbered from 1 to 5 and indicate the level of cost-sharing for a covered drug. Most plans have five formulary tiers. In general, the higher the tier, the higher the member's out-of-pocket cost for the covered drug.

  • Cost-Sharing Tier 1: Preferred Generic
  • Cost-Sharing Tier 2: Generic
  • Cost-Sharing Tier 3: Preferred Brand
  • Cost-Sharing Tier 4: Non-Preferred Drug
  • Cost-Sharing Tier 5: Specialty Tier

Tier 5 is the highest tier. It contains very high cost brand and generic drugs, which may require special handling and/or close monitoring.

So remember...Medication can be costly to your wallet but if you are unable to afford these medications it can cost you your life. A Medicare Part D plan is a great solution to be able to afford prescription drugs.

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