Medicare Part D provides prescription drug coverage to Medicare beneficiaries. Sometimes referred to as a Medicare PDP (for prescription drug plan), the policies are sold by private insurance companies.
You may add a Part D plan to Original Medicare or to a Medicare Advantage (MA) plan that does not include coverage for prescription drugs. However, most MA plans – around 90% – cover prescription medications. When comparing Medicare Advantage plans, the designation MA-PD indicates that the plan includes Part D.
Medicare Part D eligibility includes anyone who is eligible for Original Medicare (Parts A and B). You may enroll in a standalone Part D plan if you have either Medicare Part A or Medicare Part B (or both).
As Part D drug plans are provided by private insurers, you must also meet the plan’s requirements. This usually means living within the Part D plan’s service area.
Your Medicare Part D out-of-pocket costs typically include a monthly premium, yearly deductible, and either a copayment or coinsurance that you pay at the time of purchase. The amount of your Part D premium varies depending on the plan and provider you choose.
If you collect Social Security benefits, you can have your Part D premium deducted directly from your monthly payment. It typically takes 2 to 3 months before deductions begin. Once they do, your first payment will likely include all skipped payments. Once you’re caught up, Social Security only deducts one payment per month.
You may qualify for Extra Help if your income or resources are limited. This Medicare program helps beneficiaries pay a variety of their out-of-pocket costs for prescription drugs, including the Part D premium.
Medicare Part D coverage varies according to your plan. When comparing your Part D plan options, look carefully at the drug formulary. This is the list of prescription medications covered by the plan.
In addition to the formulary, most Medicare PDPs use a tier system to help manage drug costs. The tier your medication lands on gives you an idea what it will cost. Most Part D plans use 3 to 5 tiers, with costs rising along with the tier. A 4-tier example may look like this:
Tier 1
Where you find generic prescriptions and the lowest copayment, usually under $10
Tier 2
Have a few non-preferred generic drugs as well as preferred brand name prescriptions drugs, with copays between $20 and $40
Tier 3
Your non-preferred brand name drugs, with copays figured as a percent of the drug’s cost to your plan – expect to pay around 50% of the plan’s cost
Tier 4
Includes specialty drugs and has the highest copayment, typically around 30% of the retail cost
The more tiers there are, the lower your copayment usually is on the bottom tiers. For example, a 5-tier plan usually leaves you with copays under $5 for the first tier and under $15 for the second tier.
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Wed, Oct 09, 2024
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