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How do Prescription Drug Plans Work?

Medicare Prescription Drug Plans are also known as Part D. 


Medicare creates the base structure and then private companies develop the deductibles and copays as well as create the formulary - all within guideline. 


Below is an outline of how the base structure works.  Remember that these can be enhanced and vary greatly between companies and plans.

Part D Plans tend to change quite a bit from one year to the next, so it's a good idea to reevaluate your options each year during the Annual Enrollment Period.

Occasionally, a beneficiary might pay more or less than the Part D premiums listed on or the health plan's site.  These differences stem from a few things.  People generally pay less if they receive Medicaid or Low Income Subsidy, and they pay more if they are subject to IRMAA (Income Related Monthly Adjustment Amount) or have a Late Enrollment Penalty.

Things to Consider

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  • Are my medications covered in the plan's formulary?

  • Is my pharmacy in network as a preferred pharmacy?​

  • Is there a deductible?  If so, which tiers does it apply to?​

  • Am I eligible for other coverage such as Tricare, VA, or an employer group plan?

  • Does this plan participate with the Insulin Savings Program?

Understanding Part D Payment Stages

**Please be informed that the prices that are shown in each stages are for year 2024.**

Up to $545

Deductible Stage

Member pays 100% of the drug costs (if applicable) until they reach their annual deductible.

Once you reach the deductible amount, you pay a copayment or coinsurance in the initial coverage stage. 

Up to $5,030

Initial Coverage Stage

Member pays cost-share until the total costs of drugs reach the Initial Coverage Limit (ICL). The ICL includes everything the member and plan pay.

Once you reach $5,030, you enter the coverage gap or "donut hole."

Up to $8,000

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Coverage Gap Stage

Member pays 25% coinsurance for generic and brand-name drugs. Sometimes this stage is referred to as the donut hole.

Some people will move into this stage.

Once your yearly out-of-pocket costs reach $8,000, you move to catastrophic coverage.

This is new for 2024

Catastrophic Coverage Stage

Once the member's total oyt of pocket costs reach $8,000 they will pay $0 for brand and generic drugs for the remainder of the year.

Fewer people will reach this stage.

Have more questions about prescription drug plans? 
Email us to connect with a local agent or call (720) 990-1680.

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