Prescription Drug Plans- Medicare Part D

Medicare offers prescription drug coverage to everyone with Medicare Part A and/or Part B. If you currently use prescription drugs or think you may in the future you should consider joining a Medicare drug plan.  Part D coverage is not mandatory, it’s optional.   Keep in mind that should you decide not to join a prescription drug plan when you’re first eligible, you may have to pay a late enrollment fee.   If you qualify for Extra Help in paying for your prescription drugs or have creditable prescription drug coverage at least as good as Medicare you may not be assessed the late-enrollment penalty or LEP.

There are two ways to get Medicare prescription drug coverage:

       -A stand-alone PDP or Prescription Drug Plan.  You must have Part A or Part B to join.

2.       -A Medicare Advantage Plan or Part C that includes prescription drug coverage.  These plans require that you have Part A and Part B to join and are commonly called MAPD plans.

All plans must meet the same basic guidelines created by the federal government.  Each plan can vary in cost and in the specific drugs they cover on their formulary or drug list.  You want to make sure all your medications are covered on your prescription drug plan.  You also want to know your monthly estimated drug costs,  and if you are going to hit the donut hole during the year.   You must live in the service area of the Medicare drug plan you want to join, and generally you must stay enrolled for the calendar year. 

You can enroll in Part D coverage when you first become eligible for Medicare.  For most people this is three months before the month you turn 65, the month of your birthday, and three months after.   You can also join if you get Part B for the first time during the General Enrollment period, during open enrollment between October 15^th -December 7^th each year, and at any time if you qualify for Extra Help.  If you are on a limited income and you enroll in Part D, you may qualify for Extra Help in paying for your premiums, deductibles and co-payments.  Also, there are certain situations or Special Enrollment Periods when you may be able to join, switch, or drop Medicare drug plans.  An example is if you move out of the service area.  

Medicare Part D has four drug payment stages.

Stage 1 – The annual deductible stage.  The deductible varies from plan to plan.  If your plan has a deductible, you must pay the annual deductible before the plan will pay for your prescription drugs.  Once the deductible is met you move to the initial coverage stage.

Stage 2 – The initial coverage stage.  In this stage you pay a co-payment or coinsurance (percentage of the drug’s total cost), and the plan pays its share for each covered drug until the combined amount which includes the deductible reaches $3310 in 2016. 

Stage 3 – Coverage gap stage which is often called the donut hole begins once your total drug costs reach $3310 for 2016.  At this stage, you pay 45% of the cost of brand name drugs, and 58% of the cost of generic drugs.  What you pay and the discount paid by the drug company in the donut hole counts as out-of-pocket spending.   You continue in this stage until your total out-of-pocket costs reach $4850 for 2016.  Your total out-of-pocket costs are the amount you pay and what others pay on your behalf beginning January 2016. The total out-of-pocket does not include your monthly plan premium.

Stage 4 - Catastrophic Coverage – After your total out-of-pocket costs reach $4850 for 2016, your coverage gaps ends and you only pay a small co-payment or coinsurance amount for each covered drug until the end of the year.

-Jackie Greene, IEN Risk Management