Medicare Part D, sometimes referred to as a PDP (prescription drug plan), provides prescription drug coverage for Medicare beneficiaries. Original Medicare alone does not provide prescription drug coverage. You’ll have to find prescription drug coverage in one of two different ways: either enroll in a PDP on top of your Original Medicare (Part A and Part B), or purchase a Medicare Advantage plan.
Medicare Part D can be divided into four basic parts: the deductible, the initial coverage phase, the coverage gap, and then catastrophic coverage.
Your annual deductible resets every year. Medicare Part D’s deductible for 2018 is $405. That means that every year, you will not receive prescription drug coverage until you’ve spent $405 on your prescriptions. Since you can buy prescription drug plans from most major carriers, every plan can be a little different. Some plans may waive, reduce, or charge the deductible up front.
Once you’ve reached your Part D deductible, you will enter the initial coverage phase. You’ll stay in this phase until you reach a spending limit, which is $3,750 in 2018. During this time, you will be responsible for a copay for every prescription you purchase based on your drug formulary (the list of drugs that your plan covers).
Unfortunately, the Medicare Part D Donut Hole is not as fun as it sounds. Once you’ve reached the Medicare Part D initial coverage limit, you enter the coverage gap known as the donut hole in Medicare. While you’re in this phase, you will be expected to pay 65% for brand name drugs and 56% for generic drugs. This will continue until you spend a total of $5,000 on your prescriptions (this number can change yearly).
Once you’ve passed through the Medicare Part D Donut Hole, you’ll be in a phase known as prescription drug catastrophic coverage. It may feel like a long journey to get there, but once you do, you’ll be covered for 95% of your prescription costs for the rest of the year! This essentially creates an out-of-pocket limit for everyone.
Every plan will have a formulary, or a list of drugs that your plan covers. Drug formularies are organized by tiers according to copay level. For example, a cheap, generic pain killer may be a tier one medication that you only need to pay a $5 copay for, whereas a brand-name cancer drug may be a tier three medication that you need to pay a $30 copay for. Before you purchase a plan, a licensed agent can help you perform a formulary drug search to make sure the plan you like covers all of your prescriptions at a good rate.
To be eligible for Medicare Part D, you must already have traditional Medicare (Medicare Part A and Part B) and live in a service area of a plan that provides prescription drug coverage. However, it is completely voluntary to enroll in Medicare Part D. If enrolling is something you are interested in, then it is important that you familiarize yourself with the enrollment periods.
The Part D initial enrollment period begins three months before the day you turn 65 and ends three months after your birthday. If you do not enroll in either a Part D plan or a Medicare Advantage plan during that time, you will be charged a late enrollment penalty fee.
If you decide later that you do not like the prescription drug plan you chose or if you want to switch from a Part D plan to a Medicare Advantage plan, you can do that during the Annual Enrollment Period each year from October 15 through December 7.
Through satisfaction surveys, healthcare providers, and overall plan benefits, Medicare is able to give each plan a star rating (1 through 5, 5 is the highest). These ratings are updated every fall. If, after the new ratings are released, you discover that you have access to a better prescription drug plan than you had previously, you are permitted to make one change outside of the Annual Enrollment Period.
Certain circumstances may allow you to enroll in a prescription drug plan or Medicare Advantage plan outside of the Annual Enrollment Period. If you move to a new plan service area, are released from jail, lose or gain Medicaid eligibility, gain or lose a job, or if your plan is discontinued, you will have 60 days to change plans. Additionally, if you are eligible for Medicaid or another savings program (like SPAP, Extra Help/LIS, or a Special Needs Plan), you can always change plans during any time of the year.
If you do not enroll in some form of prescription drug coverage during your initial enrollment period, you will be held liable for a late enrollment penalty fee. This is not meant to punish you, but to encourage all Medicare beneficiaries to enroll in Medicare as soon as possible. In most cases, you’ll probably pay less for your Medicare than you will for an individual healthcare plan - so why wait? Even if you enroll in Part A and B (traditional Medicare) on time, you will have to pay the Part D penalty fee if you wait too long to get prescription drug coverage. Medicare Advantage is great because you can get all of your required plans in one step!
The LIS, or Low Income Subsidy program, is a federal prescription drug discount program often called “Medicare Extra Help.” LIS helps Medicare beneficiaries who do not qualify for Medicaid but still need help paying for prescription drugs. Most LIS beneficiaries save almost $4,000 on prescriptions each year! Your copays can go from as much as $40 to as little as just $2 for some drugs. Plus, those with LIS have a special enrollment period and can change plans at any time of the year!
To have LIS, you must have either a Part D plan or Medicare Advantage. LIS can also help you pay late enrollment penalty fees if you enroll in Part D or Medicare Advantage too late. It can also help you find more coverage for when you enter the Donut Hole Medicare coverage gap.
LIS qualifications are based on your and your spouse's’ income and assets. The limits change every year; an agent can help you find out if you’re eligible. Thousands of seniors & medicare eligibles out there don’t even know that they are eligible! We can help.
The donut hole is a limit on what your prescription drug plan will cover. It applies to all Medicare clients who don’t have Extra Help. In 2018, the donut hole limit is $3,750. As discussed earlier, you will enter the donut hole once you’ve spent your deductible and surpassed your initial coverage period. That means that once you reach that limit of $3,750, you are in the Medicare coverage gap, or donut hole. Once you’re in the gap, you’ll pay 65% of your brand-name drug costs and 56% of your generic drug costs (unless you have Extra Help). You’ll leave the donut hole once you spend $5,000, the 2018 out-of-pocket prescription drug maximum. Remember that these numbers and percentages may change slightly every year.
The best Medicare Part D Plan Finder tool is a licensed agent in your area. We happen to have thousands of agents across 38 states, so chances are high that there is someone in your area who can come out and help you search through your Medicare options. Our agents can help you look through your healthcare needs, like what doctors you visit regularly and what prescriptions you are taking, and your finances, like how much you can afford to pay every month, and then help you find the best Medicare Part D plan in your area.
Just like Original Medicare, if you do not enroll in a Medicare prescription drug plan when you are first eligible (period from three months before you turn 65 through three months after), you will be responsible for a late enrollment penalty fee.
If you need help enrolling, applying for low-income subsidies, or sorting through your options, you can set up a free appointment with one of our agents. Our agents are licensed to sell from several different carriers, so there will be no bias in their assistance.
Call to schedule your appointment at 1-844-431-1832, or request a call from Medicare Plan Finder!
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