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Understanding Medicare Part D Prescription Coverage

Since Original Medicare (Part A and Part B) doesn’t cover all prescription drug costs, Medicare beneficiaries often have to take into consideration what they’re going to do about prescription drug coverage. Medicare Part D is one way to help cover the cost of prescription medications, giving you broader healthcare coverage and potentially saving you money. By working with SelectQuote, we can help make sure you’re getting all the benefits you deserve and there’s no obligation to enroll.

What is a Medicare Prescription Drug plan? 

Medicare Prescription Drug plans—also known as Medicare Part D—help cover the cost of brand-name and generic prescription medications for Medicare beneficiaries. A Medicare Part D plan can be purchased as a standalone plan, to supplement Original Medicare or to accompany a Medicare Supplement plan.

Another option for prescription drug coverage is a Medicare Advantage Plan, also known as Medicare Part C. With a Medicare Advantage Prescription Drug plan, you’ll still receive hospital insurance coverage (typically covered by Part A), Medicare insurance coverage (typically covered by Part B) and prescription drug coverage all in one plan. Most Medicare Advantage plans include prescription drug coverage, although you can purchase a stand-alone Prescription Drug Plan (PDP) if your Medicare Advantage plan doesn’t include prescription drug coverage. 

What is the Medicare coverage gap?

Under Medicare Part D coverage, Medicare beneficiaries with significant drug expenses may reach the “coverage gap” or “donut hole”— the point where the total prescription drug costs reach a certain limit. The limit for 2020 is $4,0201, meaning once you and your plan have spent $4,020 on covered drugs, you’re in the coverage gap. Once you enter the coverage gap, you are responsible for 25% of the cost of your prescription drugs. You exit the coverage gap once your total out-of-pocket costs have reached $6,3502 for 2020.

What costs count towards the Medicare Donut Hole?

The costs that count once in the Medicare Donut Hole include:

  • Medicare plan deductible
  • Coinsurance/copayments of your prescriptions
  • Discounts on name-brand drugs

What costs do not count towards the Medicare Donut Hole?

The costs that do not count towards getting in the Medicare Donut Hole include:

  • Pharmacy dispensing fees
  • Monthly Medicare prescription drug plan premium
  • Cost of prescription drugs that your Medicare Part D plan doesn’t cover

How to Get Prescription Drug Coverage

Medicare Part D is available to anyone eligible for Medicare coverage, but is only offered through private health insurance plans. Although you are not required to enroll in a Medicare Prescription Drug plan, there can be significant penalties if you choose to enroll in one later than your Initial Enroll Period. To avoid any potential penalties and ensure prescription drug coverage when you need it, you should consider prescription drug coverage when you are first eligible for Medicare. 

You can make changes to your prescription drug coverage during the Medicare Advantage Annual Enrollment Period (AEP), which runs from October 15-December 7 each year, with the coverage going into effect January 1 of the following year. Part D plans can change their formulary and benefits each year, so it’s important to review your drug coverage during AEP. Even if your medications don’t change, it may be possible to save money on a different plan. 

Explore Prescription Drug Coverage with SelectQuote

If you’d like to learn more about Medicare Part D prescription drug plans, SelectQuote can help you understand your options and save you time and likely save you money. In just minutes, we can compare Medicare options available in your area, ensuring you’re getting all the benefits you deserve.

1 https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/costs-in-the-coverage-gap
2 https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/catastrophic-coverage

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