Medicare Part D, or prescription drug coverage, is a necessity for many Americans who qualify for Medicare. If you’re 65 and take no medications, you’re in the minority; the National Council on Aging reports that almost 92 percent of seniors in America have at least one chronic condition, and 77 percent have more than one. In other words, lots and lots of people need prescription drugs.
Despite the wide-spread need for prescription drug coverage, Medicare Part D is elective. You will not be automatically enrolled in Part D, like you may be for Part A. And the government will likely not cover your Medicare Part D costs, like premiums or other out-of-pocket expenses.
So how do you make sure a Medicare Part D plan is affordable for you? Well—shop your options.
Medicare Part D Costs
Medicare Part D plans are Medicare-approved insurance plans, but private companies administer them. This makes their costs widely variable. Your Medicare Part D cost could depend on where you live, what kind of plan you have, which drugs you use and whether they’re covered in your plan’s formulary, whether you take generic or brand-name drugs, and many other factors. Your premiums and copays are variable, too. In addition, you may pay extra fees if you enroll after your initial enrollment period.
In general, you’ll want to research a few places that your Medicare Part D costs will come from. Most plans will have a monthly premium in addition to your Part B premium. The premium cost is based on your income. There’s also a yearly deductible, which will vary by plan. Some plans have no deductible, but no plan can have an annual deductible of more than $400 in 2017. You may also pay copayments or coinsurance, and the cost of those will depend on your plan’s formulary. We’ll discuss formularies more in the next section.
It’s possible to get Extra Help paying your Medicare Part D premium if you have a more limited income. It’s also possible to get supplemental insurance, called Medigap, which helps you cover problem areas in your Part D policy.
What About Costs for the Prescriptions Themselves?
Each Medicare Part D plan uses a list of prescriptions, called a formulary, to categorize drugs the plan covers by cost. Medicare reviews these formularies to make sure they offer a selection of medications over a broad range of common needs. Prescriptions in a lower tier will normally be less expensive than those in a higher tier.
However, if your doctor thinks you need a more expensive medication, he or she can request that Medicare cover the higher-tier drug for you at a lower cost. Because formulary lists vary by plan, you’ll want to check the formulary for each Part D plan you’re considering to verify that your medications are covered and find out what you’ll pay.
Navigating the Part D Donut Hole
Another factor to consider in your Medicare Part D cost is the coverage gap, commonly known as the “donut hole.” Most Part D plans have a temporary limit to their benefits. The coverage gap doesn’t affect everyone, though—it comes into play once you’ve spent a certain amount. In 2018, once you’ve spent $3,700 on covered prescriptions, you’re in the donut hole. When you meet your out-of-pocket spending limit, you’re out of the coverage gap.
Keep in mind, though, that entering the coverage gap doesn’t mean you’re totally without coverage. In the donut hole, your cost in 2018 will be 35 percent of the price of brand-name drugs and 44 percent for generics.
The good news is that the donut hole will be eliminated in 2019, a year earlier than established in the Affordable Care Act. As part of the Bipartisan Budget Act passed in February 2018, Medicare Part D beneficiaries will pay 25 percent of the cost of all prescription drugs after they reach the coverage gap.
Also, 95 percent of the total price of medications (not just what you pay) counts as part of your out-of-pocket Medicare Part D costs while in the coverage gap and works toward coming out of the donut hole on the other side. Your annual deductible, donut hole discounts on brand-name prescriptions, and coinsurance or copayments also count. Costs you may incur that don’t add up toward your out-of-pocket spending limit include your Part D premium, dispensing fees from your pharmacy if applicable, and any money you spend on prescriptions your plan doesn’t cover.
Finding a Cost-Effective Medicare Part D Plan
Medicare Part D costs vary from plan to plan, and making your way through Medicare regulations by yourself is often frustrating and time-consuming. HealthMarkets has access to many Medicare Part D and Medigap plans, and we can save you time and energy by guiding you through the maze. If you need access to your prescriptions and don’t know where to turn, let one of our thousands of licensed insurance agents talk to you about your options. At HealthMarkets, we have the answers. Call us today at (800) 488-7621, or search for an agent near you.