Part D prescription drug coverage plans are administrated by private insurance companies that Medicare has approved. These plans aim to help people in Medicare pay for prescription drugs. Medicare Part D is optional, and it is up to you whether you enroll in a Prescription drug coverage plan or not.
Part D is also considered as the part of Medicare. If you’re willing to opt into the program, you will have to purchase their insurance from approved and registered private companies. Like the other parts of Medicare, Part D includes a monthly premium that may vary depending on your plan and drugs. In 2021, the basic Part D Premium plan is about $30.50/monthly.
What does Medicare Part D cover?
Part D covers all the drugs of the following six classes;
- Antineoplastics, for cancer
- Anticonvulsants, to treat epilepsy and health conditions
- Antiretrovirals used to treat HIV/AIDS
Stages of Medicare Part D
There are four stages of the Medicare prescription drug plan.
The deductible is the amount that you pay out of pocket each year on your medical services before the copays begin. Medicare sets the maximum number of deductibles each year, and insurance companies must keep their plan deductible at or below that number. So, you will have to pay the full charges of your prescription drug costs to meet the deductible.
Initial Coverage Level
After meeting the annual deductible, you will enter into the initial coverage phase. During this phase, you will have to pay a copay or co-insurance for each medication, depending on the tier type. The drugs are broken down into five different tiers.
- Preferred Generics
- Non-Preferred Generics
- Preferred Brand
- Non-Preferred Brand
- Specialty Medications
Each tier will have a copay or co-insurance associated. If we come to preferred generics, they will have the lowest copays. For example, you might find a drug that has a copay of $5 for preferred generics, $10 for non-preferred generics, $30 for preferred brands, and so on. The copay amount listed for that tier is what you pay for your medical services when you pick them at the pharmacy.
Coverage Gap or Donut Hole
During this stage, your plan can charge you as much as 25% of your brand name drugs’ cost and a bit higher percentage of your generic drugs. For example, you have a Part D plan where one of your tier 3 brand name medications costs $400, and your copay for tier costs $50.
During the initial level, you will pay $50. However, when you reach the coverage gap, many plans will charge you the full 25%. It means when you hit the gap, you would go from spending $50 to $100 on that same medication.
This stage protects you from catastrophic drug spending on your medications. When you reach catastrophic coverage, Part D carrier must pay 95% of all your covered medications costs for the remainder of the year. This stage is only the single best reason to sign-up for Medicare part D.
Who is eligible for Medicare part D?
If you are a beneficiary of Original Medicare, you can sign-up for a Part D prescription drug plan. However, if you’re looking for a Medicare Advantage prescription drug plan, you should have both Part A and Part B?