Comparing Medicare Part D Coverage
Original Medicare (Part A and Part B) surprisingly doesn’t include prescription drug coverage for most prescriptions you take at home. That’s why most Medicare beneficiaries choose optional Medicare Part D coverage.
There could be various options for Part D coverage in your area. Here’s what you need to know to compare Medicare Part D Plans and how to choose the right one for your health care needs.
What do Medicare Part D plans cover?
In order to compare Medicare Part D Plans, you need to understand the term “formulary.” A formulary is simply a list of medications your plan covers and the amount you pay for them. All formularies are required by Medicare to cover at least two different drugs in each class of prescription medication, and almost all drugs in certain protected classes, including cancer drugs, antidepressants, and anticonvulsants.
Medicare Part D Plans are offered by private insurance companies; each company sets its own formulary. When you compare Medicare Part D plans, be sure the formularies include any medications you take on a regular basis.
Most Medicare Part D Plans require you to use network providers when you fill your prescriptions. If you want to continue to use the pharmacy you currently use, be sure it participates with your plan’s network, or you could pay more out-of-pocket for your medications.
Some plans also offer a mail-in pharmacy option for medications you take on a daily basis. Your plan cannot require you to use this service, but in many cases, it’s significantly cheaper than filling the prescription yourself at your local pharmacy. If your plan offers mail-in pharmacy services, consider the potential savings when you compare Medicare Part D Plans.
What is the cost of Medicare prescription coverage?
Monthly premiums, deductibles, and copayments or coinsurance all factor into the cost of Medicare Part D plans.
If you buy a stand-alone Part D Prescription Drug Plan to complement Original Medicare, you’ll generally pay a separate monthly premium for your coverage. If you buy a Medicare Advantage Prescription Drug Plan, your plan premium will include the cost of Medicare prescription coverage.
In 2018, the annual deductible for Medicare Part D Plans could not exceed $405, although some plans do not have a yearly deductible, or set one below the government maximum.
Finally, cost-sharing is important to consider when you compare Medicare Part D Plans. Most plans use copayments, or a flat fee, when you fill a prescription. Many use a tiered copayment system, where you pay less out-of-pocket for generic drugs and a higher copayment for brand-name medications.
Your plan may also require other cost-containment measures such as prior authorization, quantity limits, or step therapy. If your plan includes step therapy, your doctor will have to try you on a less expensive medication to see if it effectively treats your condition before the plan will cover a more expensive one. If you have quantity limits with your plan, you can only get a certain number of doses of a particular medication at a time, or over a particular period of time.
Some people qualify for “Extra Help” with their Medicare Part D Plans. If you qualify for both Medicare and Medicaid, participate in a Medicare Savings Plan, or get Supplemental Security Income (SSI) from Social Security, you automatically qualify for Extra Help. Under the Extra Help program, you pay no monthly premium for Medicare prescription coverage, and you pay between $0 and $3.35 for generic medications and $0 and $8.35 for brand-name medications in 2018.
What is the coverage gap with Medicare Part D plans?
You may have heard the term “donut hole” when you’re comparing Medicare Part D Plans. The donut hole, or coverage gap, occurs when you and your plan spend a certain amount on prescription medications in a given year. In 2018, that limit is $3,750, and it includes the amount your insurance company pays for your medications, as well as your deductible and cost-sharing amounts for covered medications. It does not, however, include your monthly premium.
When you’re in the coverage gap, the drug manufacturer pays 50% of the costs for brand-name drugs, your insurance company pays 15%, and you’ll pay 35% of the costs. Medicare covers 56% of the cost of generic drugs and you pay 44% of the price while you’re in the donut hole. If your out-of-pocket costs reach the limit for catastrophic coverage ($5,000 in 2018), you qualify for additional catastrophic coverage. With catastrophic Medicare prescription coverage, you pay just a small copayment or coinsurance amount for all your covered prescriptions for the rest of the year.
The federal government is gradually shrinking the coverage gap for Medicare Part D Plans. In 2020, you’ll pay just 25% of the costs for both brand-name and generic medications while you’re in the donut hole.
Do you want to start looking for Medicare Part D coverage today? Just enter your zip code on this page to begin finding plans in your area.