Medicare Part D is prescription drug coverage, which can be added as standalone coverage to Original Medicare (A and B), or can be obtained as part of a Medicare Advantage Plan. Simply stated, it is insurance for the medication you need. In some cases, failure to enroll in a Part D plan when you are first eligible can result in permanent penalties. At Burchfield Insurance Group, we understand that navigating the world of Medicare can be challenging and we are here to help you get the prescription drug coverage you need.
For Medicare Part D, you pay a premium each month to your insurance carrier. This premium amount can be adjusted based on income. You then use the insurance company’s pharmacy network to buy your medication at a fraction on the retail cost. Whether you obtain your Part D plan as a stand alone product or as part of a Medicare Advantage Product, coverage is provided in a series of stages.
The Stages of Medicare Part D
Stage 1 – The Yearly Deductible
The Medicare Part D deductible is $435 for 2020. Plans can charge the entire deductible, part of it, or waive it completely for you. Until you have satisfied your annual deductible you will pay a discount network price for your prescription medications. Once your deductible is met, you enter Stage 2- Initial Coverage.
Stage 2 – Initial Coverage
At this point, you are responsible for the copay for your medications based on your carrier’s drug formulary. Each plan divides medications into tiers, and the tiers have unique copay amounts. As an example, Tier 1 may include generic medications with a copay of $6, while another Tier offers a preferred brand medication with a copay of $45. Your costs, along with the insurance company’s cost are tallied until the total reaches $4,020, the limit for 2020.
Stage 3 – The Coverage Gap
When you reach the 2020 limit, you enter stage 3, the coverage gap. In the gap, you pay 25 percent of the retail price of your medication. The coverage gap continues until your out-of-pocket spending for medications reaches $6,350 for 2020. (NOTE: Entering the gap, Medicare tallies your cost plus the carrier’s cost, but to escape the gap, Medicare only tallies your actual costs (deductibles, copays, gap costs, manufacturer discounts)).
Stage 4 – Catastrophic Coverage
When you reach $6,350, the end of the gap, your carrier will pay about 95 percent of cost of your medication. This leaves you paying either a low copayment or coinsurance amount for the remainder of the year.
Enrollment in Medicare Part D
Medicare Part D plans feature income based premiums. You can join Medicare drug coverage when you are first eligible, but if you join later, it may cost you a late enrollment penalty unless you qualify for Medicare’s Extra Help Program – Low Income Subsidy or have creditable prescription drug coverage. The penalty is permanent and applies for the length of your enrollment in Medicare Part D.
Medicare Part D plans change annually. Because each plan’s benefit, pharmacy and provider networks, drug formulary, premiums, copays/co-insurance may change on January 1st each year, Medicare provides an annual election period should you chose to change your plan. You should always check a plan’s formulary to ensure your medications are covered.
Medicare Part D Drug Utilization Rules
Medicare Part D drug utilization rules exist for safety as well as cost control. Each Part D provider manages their utilization rules differently. Some prescriptions may require limits on the amount of medication you can purchase during a single refill, prior authorization for plan approval before your medication can be dispensed by the pharmacy, and step therapy which requires you to try less expensive alternatives for your condition before agreeing to cover your prescribed medication. You should always check a plan’s formulary for your important medications to determine if any of these restrictions apply.
Want to Know More About Medicare Part D?
Medicare Part D (Prescription Drug Coverage) plans provide access to your medications at a fraction of the costs. There are a number of ways to obtain Part D coverage. If you have questions regarding additional medical coverage or Medicare Part D, contact the professionals at Burchfield Insurance to help you find the answers you need to choose the coverage that is best for you. You can also contact us today to receive your FREE quote.