Medicare Your Coverage Options

Medicare Part D drug plans: Three tips

Written by Diane Archer

Medicare offers prescription drug coverage through traditional Medicare or through a Medicare Advantage plan, and about 80 percent of people with Medicare–40 million–take advantage of it.  Here are three things to know about Medicare Part D drug plans, along with some information on premiums.

Enrollment: If you have traditional Medicare and you don’t have drug coverage through your job, you might also want to have prescription drug coverage through a private insurer under Medicare Part D.  If so, you should call Medicare at 1-800-633-4227 to sign up, at the same time you sign up for traditional Medicare, so that you have full coverage.  You might also need a Part D plan if you are enrolled in a Medicare Advantage plan.  If your income is low, you are eligible for help paying the cost of this coverage.

Coverage: The Medicare drug benefit covers a part of your total drug costs. Each drug plan covers different drugs, under different conditions, and charges you different amounts for those drugs.  Because there is little standardization regarding what these plans cover, whether you need special authorization, and how much you pay, it can be hard to figure out which plan to choose.  Also, some terms of coverage, such as the amount of your copay, can change at any time. Click here for a Medicare tool that can help you choose a drug plan. Keep in mind that each fall you will need to study your options if you want to keep your costs down, since most drug plans change their premium, deductibles, copays and benefits from one year to the next.

  • Many drug plans have a deductible, which can require you to pay out of pocket up to $405 before your coverage kicks in. Enhanced drug plans generally have low or no deductibles, cover a wider array of drugs, and provide more coverage in the coverage gap, but they charge higher monthly premiums.
  • Most drug plans will make you pay more for your drugs after you and your plan have spent $3,750 on covered drugs (2018). At that point, you are in the coverage gap, sometimes called the “donut hole.”
  • Unless you are enrolled in the “Extra Help” program, which protects you from the coverage gap if your income is low, you will be eligible for the “Coverage Gap Discount Program.” Under that program, you will pay no more than 35% (30% in 2019) of the drug’s costs for covered brand-name drugs and 44% of the the drug plan’s costs for covered generic drugs.
  • No matter which plan you choose, after you have paid $5,000 of your own money for covered drugs, (2018) Medicare will pick up 95% of the cost of your drugs. You will pay the greater of 5 percent of the cost or $3.35 for generic drugs and $8.35 for brand-name drugs.

Access: Each drug plan has its own rules on where you can fill your prescriptions. More and more have pharmacy networks and your costs will differ based on which pharmacy you use. Check to make sure the plan’s requirements meet your needs, both in your community and while you’re traveling.

The average drug plan monthly premium is $41.46. And some are as high as $60. But premiums, copays and coinsurance vary tremendously depending upon the plan you choose. Medicare charges you a higher premium if your income is above $85,000 and that additional premium could be nearly $75 a month if your annual income is above $160,000.

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  • The Centers for Medicare and Medicaid Services have set $34.10 as the “national base beneficiary premium” for Part D in 2016. That is the amount on which late payment penalties are calculated. Kaiser Family Foundation reports that $41.46 is the average premium, with some plans offering lower premiums and other higher premiums.

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