Prescription Drug Plans in Medicare…
Part D Prescription Drug Plans are offered through a variety of insurance companies on a standalone basis or they can be included in your Medicare Advantage plan. There are a number of standalone plans as well as Medicare Advantage plans with Part D coverage available in each state. Your most appropriate solution depends on the medications you anticipate filling and the pharmacy you prefer to shop.
Plans vary based on:
- Formulary List
- Tier assignments for each covered medication
- Copay amounts during initial coverage stage
- Network pharmacy selections
General information on Prescription Drug Plan Stages
Every Medicare Prescription Drug Plan (PDP) will have 4 stages of coverage depending on how high your medication costs get during the year. Regardless of if you purchase a Standalone PDP Plan or you have a PDP coverage through your Medicare Advantage Plan, you will have 4 stages of coverage.
- You pay full cost (you get charged the carriers negotiated pricing rather than full retail, so there may be a discount) until you pay out of pocket the deductible amount
- Carriers range from $0 to $445
- You pay copay or cost sharing (coinsurance) for covered meds until full retail cost reaches $4,130 (what you pay + what insurance co pays)
- You pay 25% of covered medications until your true out of pocket costs (TRoOP) reach $6,550 ((what you pay + any manufacturers discounts (70% brand name discount) during the donut hole))
- You pay 5% of all covered medications until the end of the calendar year (minimum of $3.70/month generic and $9.20/month brand)
Return to stage 1 in January
Part D High Income Surcharge- IRMAA
If you earn more than $88K/year (as a single), or $176K/year (as a household) to see the monthly high income surcharge you will receive on your Medicare Part D Prescription Plan. This surcharge will be billed directly by Social Security with your Part B premium (if you are collecting Social Security Income, this amount is automatically withdrawn from your Social security check once you enroll in a Part D Plan.
Do I need a Prescription Plan if I don’t take Prescriptions?
Although you are not required to enroll in a Part D Prescription plan, there are two main issues with not enrolling: Penalties and Deadlines
Part D Penalty: You will receive a Part D Late Enrollment Penalty if you do not have creditable prescription coverage after age 65.
- Creditable prescription coverage is drug coverage that is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage.
A 1% penalty added for every 1 month you go without creditable prescription coverage. Months need not be consecutive.
- The penalty will be assessed on the Average Medicare Part D Premium for as long as you are enrolled in Medicare Part D.
Part D Deadlines: If you do not enroll in a Part D within 3 months of your Part A effective date or within 63 days of coming off of creditable prescription coverage, you can only enroll in a plan once a year during the Annual Enrollment period. The Annual Enrollment Period (AEP) which is from Oct 15th – Dec 7th every year. During this time, you are able to enroll in a Prescription Drug Plan which will go into effect on January 1st. You may not enroll in a Prescription Drug Plan outside of the Annual Enrollment Period unless you qualify due to specific special exceptions.
Example: If you suddenly need drug coverage due to a health event and it’s outside of your enrollment period, you will need to wait until the AEP to enroll in a plan. The plan will not go into effect until the following January, potentially leaving you without coverage.
Please see Medicare.gov for on eligible enrollment periods for Part D.
Can I use outside discount drug programs (like GoodRx) with my Part D Plan?
Generally speaking you can use either your Part D plan or a drug discount card to purchase your medications. You cannot use both plans on the same medication. We recommend that you look up the price on the drug discount website before you go to the pharmacy. If the pharmacy quotes you a price with your Medicare plan that is more expensive than under the discount program, ask to fill your medication through the discount program instead of your insurance. Be mindful that many Medicare Prescription Plans have deductibles, so your medication cost may be high at first, but after your deductible is satisfied the cost may significantly drop. If you fill your medications outside of your plan, the price you pay will not go toward satisfying your deductible. So in some instances it may make sense to pay the higher cost of the medication under your plan and know that the cost will reduce once the deductible is satisfied.