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How to Choose the Right Medicare Part D Plan for You

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Summary: Medicare Part D plans may cover different prescriptions at different prices, although all plans have to include at least two medications from each of the most common drug categories and classes.

If you’re like most Medicare beneficiaries, you take at least one prescription drug. Prescription drugs are generally not covered by basic Medicare (Part A and Part B) but you may be able to get Medicare Part D prescription drug coverage through a private insurance company. Depending on your area, you may have multiple options for your Medicare Part D prescription drug coverage.

How to choose the right Medicare Part D plan

Before you choose a drug plan, you should first understand why you need one. Original Medicare consists of Part A and Part B, which only covers prescription medication under specific circumstances.

Medicare Part B: Part B won’t cover most drugs you get from your local pharmacy. It may cover drugs you get as shots at the doctor’s office, some oral cancer drugs, or medications used with certain durable medical equipment.

Medicare Part A: Part A typically covers medication you receive in an inpatient setting, such as a hospital.

You generally need Medicare Part D prescription coverage for helping with the types of medications that you might normally get from a pharmacy.

The first choice: Medicare Advantage or a stand-alone Medicare Part D prescription drug plan

Medicare Advantage is offered by private insurance companies. Medicare Advantage plans cover your hospital and medical benefits at least to the extent that the government covers them. Many Medicare Advantage plans come with Medicare Part D prescription drug coverage already bundled in for a convenient all-one plan.

If you decided to stick with Original Medicare (Part A and Part B) for your hospital and medical benefits you can get a stand-alone Medicare Part D prescription drug plan.

Medicare Part D formularies

You will want to be certain that you get good coverage for the prescriptions you already take. Each plan has its own list of covered medications, referred to as a formulary. Each Medicare Part D plan has to include at least two medications from each of the most common drug categories and classes. With that said, all plans won’t always include the same medications.

Drug tiers

Medicare Part D plans may also divide their formulary up into drug tiers. They will cover medications in various tiers at different amounts. This list describes typical drug tiers for Part D:

  • Generic: Manufacturers may produce medication that is identical to brand-name prescription drugs. Since generics are almost always cheaper than their brand-name versions, Part D plans will encourage you to use these with lower out-of-pocket costs.
  • Preferred brand-name drugs: Some brand-name medications may not have a generic version. In this case, the plan will charge a somewhat higher copayment but still cover them.
  • Non-preferred brand-name drugs: The prescription plan may also cover some more expensive brand-name drugs but charge a higher copay than they would for generics or non-preferred prescriptions.
  • Specialty medications: A Part D plan might cover some rarer and more expensive prescriptions because there isn’t a good replacement. Because these drugs are expensive, plan members have to share more of the cost.

Medicare Part D costs

Part D plans can help you control prescription expenses. Even with Medicare Part D drug coverage, you may have some expenses associated your plan. Consider copays, a coverage gap, and annual deductibles when figuring how much the plans you compare will cost to use. Naturally, your own costs will also depend upon the plan’s formulary and the medications you need. Many Medicare Part D plans also use networks of pharmacies, and you’ll want to make certain that you can access convenient local or mail order pharmacies with your drug coverage.

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