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Find out if Medicare Part D is right for you.
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What is a Medicare Prescription Drug plan?
Medicare Prescription Drug plans—also known as Medicare Part D—help cover the cost of prescription medications, giving you broader healthcare coverage and potentially saving you money. Original Medicare (Part A and Part B) doesn’t cover all prescription drug costs, so for Medicare recipients needing prescription drug coverage, a Medicare Part D plan can be purchased as a standalone plan to supplement Original Medicare or to accompany a Medicare Supplement Insurance plan.
Another option for obtaining prescription drug coverage is with a Medicare Advantage plan—also known as Medicare Part C. With a Medicare Advantage plan, you may be able to get prescription drug benefits if the plan also includes prescription drug coverage. These types of plans are known as Medicare Advantage Prescription Drug plans and they give you the option to get your Medicare health and prescription drug benefits covered under a single plan.
With a Medicare Advantage Prescription Drug plan, you receive hospital insurance coverage (Part A), Medicare insurance coverage (Part B) and prescription drug coverage (Part D) all in one plan. Majority of the Medicare Advantage plans do include prescription drug coverage, although you can also purchase a stand-alone Prescription Drug Plan (PDP), if your Medicare Advantage plan doesn’t include prescription drug coverage.
Key Things to Know About Medicare Part D
- Medicare Part D plans are operated by Medicare approved private insurance companies.
- Part D plans provide prescription drug coverage for both generic and brand name medications.
- The cost of prescription drug coverage varies depending on the plan you choose, which medications you use and if your pharmacy is in network.
- Drugs covered and plans can change from year to year.
When evaluating Medicare Prescription Drug plans, the following questions may be helpful for you to consider:
- Does the plan cover all of your current prescriptions?
- Are the premiums for the plan competitive compared to other options?
- Does the plan work with your preferred pharmacy or allow you to order your medications through mail?
The Cost of Medicare Prescription Drug Plans
Most Medicare Prescription Drug plans charge a monthly premium that varies by plan and where you live. If your modified adjusted gross income is above a certain amount, you may pay a Part D income-related monthly adjustment amount (Part D IRMAA)
In 2020, the annual deductible for a Medicare Prescription Drug Plan is $435. Depending upon the plan, you may be charged the full Part D deductible, a partial deductible or have the entire deductible waived.
You will pay the network discounted price for your medications until you have satisfied the deductible, at which point you will pay a copay for your medications based on the drug formulary. The insurance company tracks the amount spent by both you and the insurance company until you have together spent a total of $4,020 in 2020. Once you hit this limit, you will pay only 25% of your brand name medications and 25% of generics. You will continue these amounts until your total out-of-pocket costs have reached $6,350 in 2020.
Enrollment Options for Medicare Prescription Drug Plans
A Medicare Prescription Drug plan is an elective form of Medicare coverage, which means that you’re not required to enroll in one, but there could be significant penalties if you choose to pick up a PDP plan later than your Initial Enrollment Period. To avoid any potential penalties and ensure prescription drug coverage when you need it, you should enroll in Medicare prescription drug coverage when you are first eligible for Medicare.
You can make changes to your prescription drug coverage during the Medicare Annual Enrollment Period, which runs from October 15-December 7 each year.
Part D plans can change their formulary and benefits each year. The formulary determines how much of the cost of each medication they will cover, so it is a good idea to review your drug coverage during AEP. Even if your medications don’t change, it is possible you could save money on a different plan, but if you’re happy with your prescription drug plan, you can simply allow it to renew automatically at the end of the year.
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