Part D is coverage offered by private insurance companies to for prescription drugs. Of all the parts of Medicare (A, B, C, and D), this is the part that causes the most headaches. In this article, we breakdown exactly how Medicare Part D works for Medicare beneficiaries.
There are 2 different ways to get your Medicare Part D coverage:
A stand-alone drug plan is typically chosen to go along with a Medicare Supplement plan (which aren’t able to cover drugs). Your PDP will have its own card that you show at the pharmacy and you’ll have a monthly premium to be on the plan. Then your prescriptions will each have a co-pay depending on what Tier they are.
Prescription drug coverage can also be built into Medicare Advantage plans. You’ll continue to have co-pays just like you would if you had a stand-alone plan, but often times you can find a MAPD that doesn’t have a premium.
You may be able to save money on your monthly premium by getting your drug plan through a Medicare Advantage plan.
Every Part D plan has 4 levels of coverage. You move from one level to another based on your drug expenses for the year.
The national average for a Part D drug plan is $32.74, with some available at much lower costs and others much higher.
Picking the right drug plan is extremely dependent on the list of medications that you take. The highest price plan per month might have very low co-pays for your medications, while the cheapest plan might not cover them at all.
If you don’t take any medications, you’re likely better off with one of the cheaper plans. Consider your total out-of-pocket costs when selecting a Part D plan, not just the monthly premiums.
When you’re just starting Medicare, you’ll have an initial enrollment window for Part D, just like you do for the other parts of Medicare. Once you’re out of that window, you’ll be able to switch drug plans every year during the Annual Election Period from October 15 – December 7.
But if you do not have creditable drug coverage and you decide to get Medicare Part D – Drug Coverage at some point in the future, you’ll be given a monthly penalty based on how long you went without coverage! In our opinion, its best to pickup a cheap drug plan just to avoid the penalty.
Learn more about Medicare Penalties here.
You calculate the Part D penalty by taking 1% of the National Average Part D premium and multiplying it by the number of months gone without Creditable prescription drug coverage. That penalty amount is then added onto your monthly premium for the rest of your life if/when you do sign up for a Part D plan in the future.
The Donut Hole, also known as the Coverage Gap, is the 3rd phase of coverage for a Prescription Drug Plan. During this phase you will pay 25% of the cost of your medications.
The most popular Part D drug plan changes each year and is different based on location. We typically see the cheapest plans be very popular each year for those who take little or no prescriptions.
Big brand names like United Healthcare, Humana, Wellcare, and Aetna also consistently have plans with many members.
Medicare Part D is coverage for your prescription medications. Schedule an appointment with The Medicare Family to make sure you get the plan that is right for you.
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