Part D coverage is for prescription drugs that you obtain from a retail pharmacy. It is an optional program that allows you to access medications at a more affordable rate. The medications vary from one plan to another based on their individual formularies. In general, weight, fertility, cosmetic, cough/cold, non-prescription, off-label, or Part B-covered drugs are excluded.
Part D is only offered through private insurance companies and therefore cannot be purchased through Social Security. There are three types of prescription drug plans:
- Stand-alone PDPs
- Medicare Advantage-Prescription Drug Plans (MA-PDs)
- Cost-PD Plans
Coverage is also offered with other Medicare plans like Medicare-Medicaid Plans, PACE, and cost plans
In order to enroll in a prescription drug plan, you must be entitled to Part A and/or enrolled in Part B. Furthermore, Part D must accept people regardless of health status.
Medicare Part D Cost
Medicare Part D costs include a monthly premium and cost-sharing. Typically, the higher the premium, the lower your out-of-pocket costs are. Your options for payment include automatic payment, direct billing, or an automated deduction from an SSA benefit check. Make sure you really take the time to review the costs and coverages of each plan. Once you choose a plan you must continue paying that premium for the entire year.
Since each company sets its own rates, monthly premiums differ based on which plan you choose. Plans also differ by their forumarlies– they may cover different drugs. That is why it’s important to choose the plan with a formulary that covers the medications you need. Even the cheapest plan is not worth it if it doesn’t cover the medications you require.
Furthermore, IRMAA (income-related monthly adjustment amount) costs apply to Part D. This means that if you have a higher income you may need to pay more for prescription drug coverage.
Medicare Part D Deductible
Each year, Medicare determines what the maximum deductible for drug plans will be. In 2018, the deductible is currently $405. What this means is that companies can charge you UP TO $405 before benefits are effective. Typically, if a company chooses to charge a lower deductible, there will be a higher premium and copay.
Keep in mind that the deductible changes on a yearly basis and that a company can’t charge you more than the deductible for that year.
Medicare Part D Copays
As a management tool, drug plans usually break down medications into 5 cost-sharing tiers:
- Tier 1: Preferred generic medication
- Tier 2: Non-preferred generic
- Tier 3: Preferred brand name
- Tier 4: high-cost medication
- Tier 5: Specialty drugs
The insurance company will set the copay for each tier. This is why it’s important to review the plan’s formulary to make sure your medications are covered and to know what you can expect to pay for those medications.
Extra Help for Part D Costs
If you think you may not be able to cover your Part D monthly premium, annual deductible, coinsurance, and copayments, you may be able to receive help. There are a few options you may qualify for:
- Low-Income Subsidy:
- Anyone can apply for this at Social Security, but help is awarded based on proving low-income and limited resources.
- You must have an annual income that falls below 150% of the Federal Poverty Level based on your household size
- Full Low-Income Subsidy:
- You would pay lower cost-sharing and a $0 deductible
- There is no cost-sharing past the OOP threshold
- Partial Low-Income Subsidy:
- There is an $83 deductible
- Pay 15% cost-sharing after the OOP threshold
- Pharmaceutical Assistance Program
- You can obtain prescription drugs at a low/no cost
- Qualified SPAP counts towards your True Out-of-Pocket Costs
Medicare Part D Enrollment
Although Part D is optional, if Medicare is your only insurance and you use prescription drugs, you should consider enrolling. You can enroll during your Initial Election Period, which is when you also enroll for Part B. It includes the three months before you turn 65, your birth month, and the three months following. If you are currently insured in an employer plan, you can delay enrollment without paying a penalty.
Medicare Part D also has an annual election period (October 15 – December 7). At this time, you can enroll/ disenroll from any drug plan. This is because each plan’s formularies and rates may change on January 1 of the following year.
The insurance company will mail you an Annual Notice of Change each September. It will list everything that is changing with your plan for the following year. If you accept with the changes, your Part D drug plan will automatically renew in January. However, if you want to change your plan, you may do so during the Annual Enrollment Period.
How Do I Enroll in Part D?
First of all, you must enroll in your service area. You can enroll in Part D directly with a Medicare Part D insurance provider or through a third-party agent.
You can also enroll in a prescription drug plan via Medicare’s website or by calling Medicare at 1-800-MEDICARE.
Some Medicare Advantage plans also include built-in Part D drug coverage. It’s important to check exactly which medications a Medicare Advantage plan includes before enrolling. Be sure that your plan covers the medications you need and be aware of the specific rules that may apply to your MA plan’s drug coverage:
- PPOs and HMOs: You may only obtain drug coverage through the plan
- MSAs: You can only obtain drug coverage through a stand-alone PDP
- PFFS and Cost Plans: You can obtain drug coverage through a stand-alone PDP OR through the plan
Special Election Periods for Medicare Part D
Once enrolled in Medicare Part D, you may not change your plan for the rest of the year. However, there is a way to change it mid-year if you meet certain criteria. This is what Special Election Periods (SEP) are.
There are many circumstances that could qualify you to use a SEP, and the details vary for each one. It would be helpful to talk to agents like us to help guide you determine if you qualify. There are also further details on our page on enrollment periods.