If you’re reading this, you must be wondering what Medicare Part D coverage is. Medicare Part D is a federally regulated program operated through private insurance companies. These private insurance companies offer prescription drug coverage to Medicare beneficiaries. Before 2006, when Medicare Part D started, tens of thousands of Medicare beneficiaries in the United States had little help with retail drug costs. Fortunately, today’s Medicare beneficiaries have much better coverage with Medicare Part D. Beneficiaries can enroll in a standalone Part D drug plan that will go along their original Medicare benefits. Or they can pick a Part D drug plan that’s built into a Part C Medicare Advantage plan. Read on to learn all about Medicare Part D, how it works, and how it helps you!
What is Medicare Part D?
Medicare Part D is insurance for your prescription medication needs. How it works is, you pay a premium each month to an insurance provider for your Medicare Part D plan. In return, you will use the insurance carrier’s network of different pharmacies to buy your prescription medications. While using your Part D plan, instead of paying full price, you will pay a copay or percentage of the drug’s cost, and most of the time, Medicare Part D plans have an annual deductible as well. Once you have paid your share of the costs, the insurance company will then pay their share according to how the plan is set up. These costs vary from plan to plan and even change year to year. The plan you choose will have their unique formulary for medications, and cost-sharing responsibility that will be listed in the plans unique summary of benefits booklet. Medicare part D plans set their unique cost-sharing every year and summarize the benefits in the plans unique summary of benefits booklet, which is presented at the beginning of open enrollment, which occurs October 15 through December 7 of each year. The plan’s benefits will last throughout the entire year, starting January 1 through December 31 of that year.
Keep in mind that your Medicare Part D card is separate from your original Medicare card or Medigap plan card if you have a Medigap policy.
Medicare Part D plans follow federal guidelines and will require each plan to follow a set structure. The plan will be able to have their unique formulary and cost-sharing setup.
There are four stages to all Part D drug plans, and are set up as follows:
Annual Deductible with Medicare Part D
In 2021, the maximum allowable Medicare Part D deductible is $445. Plans might charge the full Part D deductible, a partial deductible, or waive the deductible altogether. You will pay the network a discounted price for your medications until your plan tallies that you’ve satisfied the deductible. After that, you will enter initial coverage.
Initial Coverage with Medicare Part D
During this stage of your Part D coverage, you will pay a copay for all of your medications based on the drug formulary and unique set up, set by the insurance company. Each drug plan will then separate its medications into different tiers. Each tier has a copay amount according to the Medicare Part D drug company’s formulary, which you will pay. Then the insurance company will track the spending by both you and your insurance company as well.
The Coverage Gap
After you have reached your initial coverage limit for the year, you’ll enter the coverage gap. During the gap in 2021, you’ll pay about 25% of the retail price of your medications. This is much better than the situation in 2006 when people had to pay 100% of their drugs in the gap. Medicare tracks the total amount of what you and your insurance company have spent, but to get out of the gap, they’re counting only what you’ve paid in copays, deductibles, and gap spending that year.
After you have reached the end of the coverage gap, your plan will kick in. It will then pay about 95% of all the costs of your formulary medications for the rest of the year. This feature in Part D helps you limit your potential spending if you’ve got expensive medications.
How we can help
The agents at Healthcare American are licensed to assist you with your unique prescription requirements. Keep in mind that each plan will cover their specific drug formulary, and will change each year. We can ensure that you are set up correctly year to year and that the formulary of your plan covers your unique medication requirements and that the cost-sharing for your specific needs are the most economically compatible with the plan you choose.
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Healthcare American is an independent insurance broker that you can trust with all of your personalized retirement planning needs. We provide customers with healthcare, life insurance, and retirement plans, tailored to their personal needs and individualized situations! We will provide the best insurance plans and tailor-made retirement plans to those living in the Baltimore, Washington DC, Virginia, Delaware, and Pennsylvania areas!
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