Medicare Part D

Medicare Part D Plans are optional prescription drug plans that lower the cost of your medications at the pharmacy. You enroll in a Part D plan through an insurance company in your home state.

Instead of paying the full cost for your prescriptions, you will pay copayments determined by your plan.

Medicare Part B covers some outpatient prescription drugs that are administered in an outpatient hospital setting or via a durable medical device, such as an external pump. For all other medications, you will need a prescription drug plan to avoid paying the full cost.

Choosing a Medicare Part D plan is easier said than done. Many people tell us that they are confused by too many choices. The best way to find the right plan is to have an agent assist you.

What Medicare Part D Covers

Medicare Part D allows for coverage of most retail prescription drugs in the United States. Each plan maintains a list of medications that it covers, called a formulary. Medicare requires that the plan must offer at least 2 drugs in each therapeutic class. Also, they cover all or substantially all drugs in the following six categories: anticancer, anticonvulsants, antidepressants, antipsychotics, antiretrovirals (treating HIV/AIDS), and immunosuppressants.

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How and When to Enroll in Part D

When you first become eligible for Medicare, you can join during your Initial Enrollment Period. 

You can join, switch, or drop between October 15–December 7 each year. Your changes will take effect on January 1 of the following year, as long as the plan gets your request before December 7.

Enrolling in Part D is voluntary. However, you should think about not just the medications you are taking now but also those that you may need in the future. There are some very important reasons why you should consider enrolling.

What Happens If I Don’t Enroll in Part D When I am First Eligible?

If you fail to enroll in Part D during your Initial Enrollment Period, you will have to wait for a future Annual Election Period to enroll, which means you could be paying the full retail cost of medications for months. Unless you had other creditable drug coverage, like employer coverage or VA benefits, you will be assessed a late penalty when you eventually enroll. 

The Part D late enrollment penalty is calculated by Medicare as follows: 1% of the national average base Part D premium for every month that you went uncovered and did not have other creditable coverage. The penalty is rounded to the nearest $.10 and then added to the premium you pay for your new Part D plan. When you do finally enroll in Part D, you will pay the penalty for the rest of your life.

Costs under Medicare Part D

Your costs under Part D include your plan premiums and the copays you pay for each prescription medication. Copayments are based on a tier system, which determines drug costs based on whether they are generic, brand-name, preferred, non-preferred, or specialty drugs. A Tier 1 drug would be a preferred, generic drug with a low copayment. A Tier 5 drug would be a specialty drug that requires special handling or administration, which would have the highest copayment.

What is the Medicare Donut Hole?

The Medicare donut hole is a gap inside of your Part D coverage after you and your insurance company have spent a certain amount on prescriptions. Medicare sets this limit annually. Once you and your plan have spent $4,130 on covered drugs in 2021, you’re in the coverage gap.

After you reach the gap, you will pay a percentage of the cost of each medication instead of your usual copayment. In 2021, you pay 25% of the cost of your brand-name medications and 25% of generics once you reach the Medicare donut hole. 

Once you’ve spent $6,550 out-of-pocket in 2021, you’re out of the coverage gap. You enter catastrophic coverage and will pay no more than 5% of the cost of your medications for the rest of the year. The insurance company picks up the rest.

If you are in the Illinois, Missouri, or Iowa area, reach out to us today. We can help you find a prescription drug plan that meets your needs!