Medications. They are increasingly becoming a big part of our lives, and being able to afford them is a huge concern to those here in San Antonio, Texas, the greater area and the country frankly. So what is Medicare Part D in a nutshell? Basically, Medicare Part D will help pay for the medications your doctor prescribes, such as brand-name and generic medications. Medicare Part D went into effect on January 1, 2006 as part of the Medicare Modernization Act. Anyone with Part A or Part B is eligible for Part D coverage, as long as they live in an applicable service area. In order to receive this benefit, a person with Medicare must enroll in a stand-alone prescription drug plan (Part D) or Medicare Advantage plan with prescription drug coverage built into the plan (MA-PD). Medicare Part D plans approved and regulated by the Medicare program, but are actually designed and administered by private health insurance companies such as Silverscript.
Do I Need Part D Coverage?
As you might recall from our Medicare 101 page, Part B of Original Medicare will only cover limited drug coverage such as chemotherapy drugs that are only to be administered in a hospital or outpatient setting and you are stuck with the bill of 20%. That high-blood pressure medication you pick up monthly at CVS is not covered under Part B, so that is where Part D coverage comes into play.
Now, there are folks that may not have any medications and see no benefit of getting Part D (either as a stand-alone plan or embedded into a Medicare Advantage plan) and may feel inclined to use services like GoodRx instead (a free coupon-based program). The issues with this reasoning come down to a few factors such as being penalized for not having creditable drug coverage when first eligible for Medicare (will address below), and if by chance you are prescribed medications that GoodRx or the equivalent don’t help cost-wise, you are stuck in most case paying near the retail-cost of the medication. Not too good, huh?
How Much Do Part D Plans Cost?
Medicare prescription drug plans have different coverage and costs but most offer at least the standard level of coverage set by Medicare. How much someone pays for their Medicare drug coverage is dependent on many factors, such as types of medications you take, the plan you choose, if you go to a pharmacy in your plans network, whether your receive assistance with your drug coverage, and so forth.
Drug coverage costs are affected by the following key areas:
Monthly premium– Most drug plans charge a monthly fee that differs from plan to plan and this is payed in addition to your Medicare Part B premium (see Medicare 101 page). If someone belongs to a Medicare Advantage plan with drug coverage built into the policy like an HMO or PPO, the monthly premium for the plan may already take into account drug coverage. If someone’s income is above a certain amount, they may pay an extra amount for their drug coverage via a Part D income-related monthly adjustment amount (Part D IRMAA). Social Security will notify you if you have to pay an IMRAA.
Yearly deductible- The deductible is what you have to pay for your drugs before your plan begins to pay. A key point is that no Medicare drug plan whether in Texas or elsewhere in the United States, can have a deductible more than $435 in 2020. Some plans don’t charge a deductible, but are probably having you pay a hefty premium for that luxury.
What is Not Covered In Part D Plans?
Drugs that are covered under Part A or Part B, such as those given in a hospital or a doctor’s office. Sometimes, you may encounter a drug that you are prescribed that is not on your plan’s formulary. So what do you do? In this case, you may want to request an formulary exception, especially if it is a medically necessary drug. Also, certain types of drugs are that are excluded by Medicare, may not be covered in a Part D plan, like Viagra for example and also non-prescription medication, such as vitamin supplements. Additionally, Medicare also excludes drugs for weight loss/gain, fertility promotion, and cosmetic purposes or hair growth.
When Can I Join A Medicare Part D Plan?
If you are new to Medicare, you can sign up for a Part D plan under an Initial Enrollment Period (IEP), which is 7 months long. It includes your birthday month, plus the 3 months before and the 3 months after your birthday month. So for instance, if you are turning 65 in January, you can sign up starting in October of the prior year. If you have creditable drug coverage from an employer or other insurance, which is on par with Part D benefits, you do not need to enroll in a Part D plan right away. In fact, you have a 2 month Special Enrollment Period (SEP), which allows you to enroll after losing other coverage. But if you did not have creditable coverage, and are over 63 days, you could get charged a penalty if you enroll later. This is a fee that is added to your Part D premium each month for as long as you’re enrolled in the plan. For more information on this penalty, please click here.
One can also sign up during the Annual Enrollment Period (AEP), which starts October 15th through December 7th. Changes made during this time, will be effective January 1st of the following year. Another instance is if you qualify for a Special Enrollment Period (SEP), which means you get help with your prescription drugs from the government, often referred to as “Extra Help“, or you lost your employer drug coverage. In any case, you are allowed to sign up for a plan, at any point in the year.
Do These Plans Cost Anything?
Yes, you will have to pay a monthly premium in order to have a Part D plan. Premiums vary depending on the company, and differ depending on the formulary structure, and what drugs you take. In 2018, the average nationwide premium was $33.19.
Will I Have A Deductible To Meet With Part D Plans?
It depends on the plan you choose, some have deductibles for only certain higher tiered drugs, while others may not have a deductible at all.
What Are The Coverage Limits With Medicare Prescription Drug Plans?
Most Medicare Part D plans have a coverage gap or what many refer to as a “donut hole”, which basically means that there is a temporary limit on what the plan will cover for drugs. How it works, is after your total drug costs and plan related drug costs reach a certain dollar amount ($3,820 for 2019), you enter the coverage gap. Once reached, you will pay no more than 44% coinsurance for generic drugs or 35% coinsurance for brand name drugs, for any drug tier during the coverage gap.
After your yearly out-of-pocket drug costs (including drugs you purchased through your pharmacy and mail order) reaches $5,100, you will then pay the greater of 5% coinsurance or $3.40 for generics (including brand drugs treated as generics) and a $8.50 copay for all other drugs. Keep in mind you may not even reach the coverage gap, as it depends on how many and what medications you take. For some tips on ways to avoid the gap, click here.
What Is A Tiered Formulary?
Many plans will group any covered drugs together by cost. These groups are referred to as tiers. In general, the lower the tier, the less you’ll have to pay. For example, you may pay less for a Tier 1 generic drug, than for a Tier 3 brand name version of the same drug. That is why it may be beneficial to ask your doctor for generic drugs, as they are required by the Food and Drug Administration (FDA) to have the same ingredients as the brand-name version.
What Pharmacies Can I Use With A Medicare Part D Plan?
Each prescription drug plan has a network of contracted pharmacies. You must use this network of pharmacies to get discounted plan pricing for your drugs. If you choose to go to a pharmacy that is considered out-of-network, your share of the drug cost will be more. Something to also consider is mail order, as many Part D plans offer this feature, where you can have your drugs mailed to your home, often at discounted rates.
At The Harrin Group here in San Antonio, we want to remind all Medicare beneficiaries to be aware of any substantial changes (formulary and deductibles) to both individual Medicare Part D plans, and Medicare Advantage plans that have Part D included. It is imperative to look at the Summary of Benefits and also Evidence of Coverage, for full details on what you are expected to pay for drug costs.
Did You Know?: As you will hear in this short video below, competition in the Part D plan market is a good thing. For example, every year, drug manufacturers and insurance providers negotiate savings for Part D medications, which results in affordable access to medications for beneficiaries.
The Harrin Group offers free, comparative quotes on Medicare Part D plans from multiple insurance carriers so you can get the best possible rate.
Want to see how much we can save you? Just request a quote to find out.
Sources: Medicare.gov, The Social Security Administration, My Medicare Matters , eHealth Medicare, Medicare Today