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 Medicare.gov 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?
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Is my pharmacy in network as a preferred pharmacy?
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Is there a deductible? If so, which tiers does it apply to?
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Am I eligible for other coverage such as Tricare, VA, or an employer group plan?
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Does this plan participate with the Insulin Savings Program?
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Do I qualify for Low Income Subsidy or Medicaid? Find out more about LIS.
Understanding Part D Payment Stages
Up to $480
Deductible Stage
During this stage, if your plan has a deductible, you usually pay the full cost of your drugs up to the deductible amount. Some plans waive this or apply it only to certain tiers.
Once you reach the deductible amount, you pay a copayment or coinsurance in the initial coverage stage.
Up to $4,430
Initial Coverage Stage
During this stage, the plan pays its share of the cost and you pay a copayment or coinsurance (your share of the cost) for each prescription you fill until your total drug costs reach $4,430.
Most people will remain in this stage.
Once you reach $4,430, you enter the coverage gap or "donut hole."
Up to $7,050
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Coverage Gap Stage
During this stage, you receive limited coverage on certain drugs. You'll pay 25% of the cost of brand-name drugs (plus part of the dispensing fee) and 25% of the cost of generic drugs. This stage continues until your yearly out-of-pocket drug costs reach $7,050.
Some people will move into this stage.
Once your yearly out-of-pocket costs reach $7,050, you move to catastrophic coverage.
Through the end of the year
Catastrophic Coverage Stage
During this stage, you pay only a small copayment or coinsurance amount for each prescription you fill.
Fewer people will reach this stage.
Have more questions about prescription drug plans?
Email your local agent or call (720) 990-1680.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.” Not connected with or endorsed by the United States government or the federal Medicare program. This is a solicitation for insurance and your response may generate communication from a licensed producer/agent.
Not connected with or endorsed by the United States government or the federal Medicare program. This is a solicitation for insurance and your response may generate communication from a licensed producer/agent.