Medicare Your Coverage Options

Medicare Part D drug coverage

Written by Diane Archer

Whether you are enrolled in traditional Medicare or a Medicare Advantage plan, you can get prescription drug coverage through a Medicare Part D drug plan. Part D drug companies are commercial insurance companies that contract with the federal government to provide drug coverage to people with Medicare. About 80 percent of people with Medicare–43 million–take advantage of it.

Here’s how Medicare Part D coverage works and what to consider before choosing a Part D drug plan, along with how to enroll and premiums.

  • Many drug plans have a deductiblewhich can require you to pay up to several hundred dollars out of pocket 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 around $3,820 (2019) on covered drugs. 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, in 2019 you will pay no more than 25% of the drug’s costs for covered brand-name drugs and 37% of the the drug plan’s costs for covered generic drugs while you are in the donut hole.
  • No matter which plan you choose, after you have paid $5,100 of your own money for covered drugs (2019), Medicare will pick up 95% of the cost of your drugs. You will pay the greater of 5 percent of the cost or $3.40 for generic drugs and $8.50 for brand-name drugs.

Keep your costs down: Do your homework. Each drug plan has different premiums, deductibles and copays and covers different drugs under different conditions. You can save a lot of money by choosing your plan carefully.

  • Does the Part D plan cover the drugs you take? You want to make sure the drugs you take are on the Part D drug plan’s formulary and whether there are any restrictions on coverage. If it does not, you should ask your doctor if you could take the drug on the formulary instead.
  • Where can you get your drugs? Find out whether you can continue to use the pharmacy you use to get your drugs and whether you can get drugs by mail order and when you travel.
  • What will your costs be? Ask what your out-of-pocket costs will be, including the monthly premium, as well as the deductible and copays for the drugs you take at in-network pharmacies and what they will be at out-of-network pharmacies.
  • Is the drug plan in your service area? You must choose a drug plan in your service area, so you should understand what that area is.

You should also check to see whether you are eligible for a state pharmaceutical plan or for Extra Help with your prescription drug costs.

Enrollment: If you have traditional Medicare, you can 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. Most Medicare Advantage plans fold Medicare Part D coverage into their benefit package. If your income is low, you are eligible for help paying the cost of this coverage.

Click here for Medicare’s plan finder tool that can help you choose a drug plan. It will tell you which drugs a particular plan covers at any given time.

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. 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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