Medications. They are increasingly becoming a big part of our lives, and being able to afford them is a huge concern to those here locally in Texas and the country frankly. So what is Medicare Part D in a nutshell? Basically, Medicare Part D is a prescription drug plan that 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 Medicare 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 are approved and regulated by the Medicare program, but designed and administered by private health insurance companies such as Silverscript.
Do I Need Medicare 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 Pharmacy 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 (a free coupon-based program) instead. The issue with this reasoning comes 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 can’t help cost-wise, you are stuck in most cases paying near the retail-cost of the medication. Not too good, huh?
What Drugs Are Covered?
This depends on what plan you choose. Each plan has a list of covered drugs, called a formulary, and different tiers on where these drugs fall into. Drugs in each tier have a different cost. The lower the tier, the less expensive the medications will be. Most generic medications will usually be in the first two tiers (tiers 1-2) and brand-name medications in the upper tiers (such as tiers 3-5). It is important to note that a plan’s formulary is subject to change and your plan will have to notify you of any formulary changes that affect the drugs you are taking.
What Drugs Are Not Covered?
Essentially, drugs that are covered under Medicare 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 Original Medicare, may not be covered in a Medicare 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.
What Pharmacies Can I Go To?
This also depends on the plan you choose. For instance, Silverscript here in Texas utilizes CVS as its main preferred pharmacy, as well as some others. If I went to Walgreens on one of their Texas plans, I may have to pay more than if I had went to a preferred pharmacy. It is vital to ensure you are getting the best rates for your medications on your drug plan, by using one of their preferred pharmacies. You may also save money by doing mail order, if your plan has that benefit.
How Much Do Medicare 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 plan’s network, whether your receive assistance with your drug coverage, and so forth.
What Is A Premium?
Most Medicare drug plans charge a monthly fee (premium) that differs from plan to plan and this is payed in addition to your Medicare Part B premium (see Medicare 101 page) and if you have a Medicare Supplement as well. For 2020, the average nationwide monthly premium is $32.74 for a Part D plan. If someone belongs to a Medicare Advantage plan with drug coverage built into the policy like an HMO or PPO for instance, the monthly premium for the plan may already take into account drug coverage. If someone’s income is above a certain limit, 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.
What Is A Yearly Deductible?
Simply put, the deductible is what you pay for your drugs, before the plan begins to pay. No Medicare Part D plan may have a deductible more than $435 in 2020, and some plans don’t have a deductible. You will most likely see a deductible apply to drugs that are brand-names, like Synthroid for example. If possible, we advise you to always seek the generic form of a medication if available, as you most likely won’t have to meet a deductible first.
What Is A Copayment/Coinsurance?
So after one meets the deductible (if applicable) for their Medicare prescription drug plan, they will either have a copayment or coinsurance for medications. This is dependent on how your medications are classified on the plan’s formulary (list of medications that are covered by your plan). So for instance, I may take Rosuvastatin, which shows up as a tier 1 medication on my Medicare Part D plan in Texas. I have no deductible for this tier and my copay is $1 for a 30-day supply.
What Is The Coverage Gap Process (Donut Hole)?
How it works is this. Your plan pays its share of the cost and you pay a copayment or coinsurance (your share of the cost) for each prescription you fill until your total drug costs reach $4,020. Once you reach $4,020, you enter the coverage gap or “donut hole”. During this stage, you receive limited coverage on certain drugs. You’ll also get a discount on brand-name drugs and generic drugs. In 2020, you’ll only pay 25% for both covered generic and brand-name drugs while in the gap. This stage continues until your yearly out-of-pocket drug costs reach $6,350.
Once your yearly out-of-pocket costs reach $6,350, you move to catastrophic coverage. In this stage, you pay only a small copayment or coinsurance amount for each prescription you fill, the greater of 5% coinsurance or $3.60 for generic medications (including brand name drugs treated as generics) and a $8.95 copay for all other drugs.
What If I Need Help Paying For My Medicare Prescription Drug Costs?
Extra Help: As you already know, anyone who has Medicare can get Medicare prescription drug coverage. Some folks with limited resources and income may be able to get Extra Help (a program administered by the Social Security Administration) to help lower Part D costs (premiums, annual deductibles, copays). This assistance is estimated to be worth about $5,000 a year. To find out if you qualify, Social Security will need to look at some financials, such as the value of your savings accounts, investments, real estate (other than your home), and your income. This includes your spouse, if you are married and living together.
For 2020, your resources must be limited to $14,610 for an individual or $29,160 for a married couple living together. Resources as it pertains to this program, entails things such as stocks, bonds, cash, etc. Some things that don’t count as resources are life insurance policies, your home, vehicles, etc.
For 2020, your annual income must be limited to $19,140 for an individual or $25,860 for a married couple living together. Even if your annual income is a bit higher, you may still be able to receive some help and we encourage you to apply. Some things not counted as income for this program, are housing assistance, food stamps, scholarships, etc. As you will learn below when we talk about enrollment periods and penalties, if you qualify and receive Extra Help, you will not incur a late enrollment penalty for Medicare Part D.
Some folks may automatically qualify for Extra Help if they have Medicare and meet any of these conditions: full Medicaid coverage, get help from the state Medicaid program paying Medicare Part B premiums, or get Supplemental Security Income (SSI) benefits.
To learn more about the Extra Help program from the Social Security Administration, click here to download the latest 2020 guide. You can apply online in minutes for Extra Help here or call Social Security at 1-800-772-1213. We can also assist you with this process, if you decide to work with us in securing you a Medicare Part D plan or Medicare Advantage plan.
Medicare Savings Programs: This is assistance from your state and they can help cover your Medicare premiums (ie. Part B), coinsurances, and more. There are different levels of Medicare Savings Programs, that are dependent on your income: 1. Qualified Medicare Beneficiary (QMB), 2. Specified Low-Income Medicare Beneficiary (SLMB), Qualifying Individual (QI), and Qualified Disabled and Working Individuals (QDWI) program. QMB will cover the most for someone, and QI/QDWI will be on the lower end as far as coverage. To see more on these programs and income limits, click here. If you are already on Medicaid before turning 65, then you should automatically convert to a Medicare Savings Program. If you are in Texas and want to apply online, click here. There are also certain Medicare Advantage plans (Part C) that are tailored for folks that are “dual” (ie. Medicare and Medicaid) that you should look into when turning 65 and have Medicaid. These types of Medicare Advantage plans will always include prescription drug coverage.
When Can I Sign Up For A Medicare Drug Plan?
You can sign up for a Medicare prescription drug (Part D) plan during the enrollment periods below:
Initial Enrollment Period-When you first become eligible for Medicare, you can sign up during what is referred to as the Initial Enrollment Period (IEP). This 7-month period begins 3 months before you turn 65, the month of your 65th birthday, and ends 3 months after you turn 65. If you join during 1 of the 3 months before your turn 65, your coverage will begin the first day of the month you turn 65. On the flip side, if you join during your birthday month, or 1 of the 3 months after you turn 65, your coverage will begin the first day of the month after you ask to join a plan. After enrolling during your IEP, any plan changes can only be made at certain times of the year, as you’ll learn below.
Annual Enrollment Period-Between October 15th- December 7th, anyone who has Medicare can join, switch, or drop a Medicare Part D plan. Coverage will begin on January 1st, so long as you enrolled before the end of December 7th. We caution you to be wary of all the noise you will hear during this time, and to analyze if your Medicare drug plan is still working out for you. It never hurts to see what is out there, and ensure you are getting the lowest cost you can for your medications. Often here in San Antonio, Texas and beyond, we hear horror stories of dishonest agents who were careless in their assistance with seniors, and put them on plans that were less than ideal for them, or suddenly become “unreachable” after they get the sale. Be careful is our advice!
Open Enrollment Period- This period runs from January 1st through March 31st each year. You can only make one change during this period, and any changes made will be effective the first of the month after the insurance company gets your request.This period applies if one has a Medicare Advantage plan and is considering either going to a different Medicare Advantage plan (maybe one with drug coverage), or going back to Original Medicare, at which point they can get a stand-alone Medicare prescription drug plan (Part D). Keep in mind, that one cannot use this period to go from one Medicare drug plan to another.
Special Enrollment Period- In certain situations, you may be able to join, switch, or drop a Medicare drug plan during this period. You must qualify due to certain reasons, such as having both Medicare and Medicaid, receiving “Extra Help” from the government with your drugs, changing where you live and having to enroll in a different Medicare drug plan such as from Texas to California, leaving employer coverage, etc. It is vital to pay close attention to deadlines you have during this enrollment period. For instance, you have a 2-month window after your work coverage ends, to acquire a Medicare drug plan. If you make a change, it will take effect on the first day of the following month. One last important point here is that if you change Medicare drug plans, you do not have to tell your current plan you are leaving, because joining a different Medicare drug plan will automatically dis-enroll you from the current plan. Your new Medicare drug plan should send you a letter informing you when your coverage with the new plan begins.
What Is The Part D Late Enrollment Penalty?
The late enrollment penalty is an amount that is added to your Part D premium if, at any time after your Part D Initial Enrollment Period is over, there is a period of 63 days or more in a row when you do not have Part D coverage or other creditable prescription drug coverage. How much this penalty is depends on some factors, but it is primarily calculated by multiplying the 1% penalty rate times the “national base beneficiary premium” ($32.74 in 2020), times the number of full, uncovered months you were eligible to join a Medicare drug plan, but did not and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium.
Here is an example:
Let’s say I went without creditable drug coverage for 21 months, until I realized there was a lifetime penalty. My penalty is 21% (1% for each of the 21 months) and the national base beneficiary premium is $32.74 for 2020. The math is as follows: .21 (21% penalty) X $32.74 (2020 base beneficiary premium) = $6.88, which we round to the nearest $0.10, and my penalty= $6.90. This is in addition to my plan premium.
If you do get a penalty and don’t agree with it, you can ask for a review or reconsideration (usually a 60-day window from when the penalty was enacted). Your Medicare drug plan should provide you with the proper documentation.
How Do Other Insurance And Programs Work With Part D?
Medicaid: If you have Medicare and Medicaid coverage, Medicare covers your Part D prescription drugs. Medicaid may still cover some drugs that Medicare doesn’t cover.
Employer Or Union Health Coverage: If you have prescription drug coverage based on your current or previous employment, your employer or union will notify you each year to let you know if your prescription drug coverage is creditable. Make sure to keep the information you get, as you may have to provide this to a future Medicare drug plan, should you get off the employer plan.
COBRA: This is a federal law that allows you to temporarily keep employer or union health coverage after one’s employment ends. If someone takes COBRA and it includes creditable drug coverage, you’ll have a Special Enrollment Period to join a Medicare drug plan without paying the Part D late-enrollment penalty.
Federal Employee Health Benefits (FEHB) Program: This is health coverage for both current and retired federal employees and covered family members. FEHB plans will usually include prescription drug coverage, so you don’t need to join a Medicare drug plan. If you do want to join a Medicare drug plan, you can keep your FEHB plan, and in most cases, the Medicare drug plan will pay first.
Veteran’s Benefits: This is health coverage for veterans and people who have served in the U.S. military. You may be able to get prescription drug coverage through the U.S. Department of Veterans Affairs (VA) program. You may join a Medicare drug plan, but if you do, you can’t use both types of coverage for the same prescription, at the same time. One popular route for veterans who like using the drug component of their VA health plan, is to acquire a Medicare Advantage plan with medical benefits only, as their may be more of a cost savings with these types of Medicare Advantage plans compared to others.
TRICARE: This is a health plan for active-duty service members, military retirees, and their families. Most people with TRICARE who are entitled to Medicare Part A, must also have Medicare Part B to keep TRICARE prescription drug benefits. If you do have TRICARE, you don’t need to join a Medicare drug plan, but in the event you do, your Medicare drug plan will pay first and TRICARE will be the secondary. If you happen to join a Medicare Advantage plan that has prescription drug coverage built into the plan, your Medicare Advantage plan and TRICARE may coordinate their benefits if both plans use the same network pharmacy. Otherwise, you can file your own claim to get paid back for your out-of-pocket expenses.
CHAMPVA: This is a health plan for the spouse or widower and children of a veteran who either have a permanent and totally disabling condition from the service, died of such a condition from the service, or died on active duty and the dependents are not otherwise eligible for TRICARE benefits. For seniors, one needs to have both Medicare Part A and Medicare Part B to be eligible for benefits. If you enroll in a Medicare drug plan, Medicare will be your primary and CHAMPVA the secondary payer. In many cases, in might make more sense to utilize the CHAMPVA drug component over an outside Medicare drug plan, because their is no additional premium for CHAMPVA on prescription drugs and the maximum out-of-pocket expenses is capped at a lower amount ($3,000) for CHAMPVA than Medicare drug plans.
Indian Health Service: The IHS is the primary health care provider to the American Indian/Alaska Native Medicare population. The IHS system delivers a spectrum of clinical and preventative services through a network of hospitals, clinics and other entities. Many IHS facilities participate in the Medicare prescription drug program. If you get your prescription drugs through such a facility, you will continue to receive your drugs at no cost to you, and coverage won’t be interrupted. Joining a Medicare drug plan may help your IHS facility, because the drug plan pays them the cost of your prescriptions.
What Are Star Ratings And Why Do They Matter?
Star ratings are a way for consumers to compare the relative quality of care of Medicare Part D plans. The Centers for Medicare & Medicaid Services (CMS) issues the ratings based on:
Plan Member Surveys
Every Medicare Part D plan receives star ratings from one star (lowest) to five stars (highest). CMS also issues an overall star rating for each plan. This matters because if you run into a plan with a low star rating, you might want to research why! This system also matters on the opposite spectrum, because if you run into a 5-star Medicare Part D plan in your area, this creates a Special Enrollment Period in its own right, as between December 8th and November 30th, you can enroll in a 5-star plan, one time
Do Agents/Brokers Get Paid To Enroll Me On A Medicare Part D Plan?
Yes. We are real straight-forward folks here at The Harrin Group and want to give you a behind-the-scenes look at compensation. Basically, an agent or broker gets compensated from the insurance company he/she is representing, for every new Medicare Part D plan enrollment. While we won’t go into exact numbers, an agent or broker gets compensated more if someone is “new” to Medicare (turning 65) and less if they are changing Medicare Part D plans during the Annual Enrollment Period for example. You want to be really, really careful about who you work with, and ensure they are independent insurance agents/brokers who represent multiple insurance companies, don’t charge any fees to assist you, are highly rated, ethical and reliable folks that present all options based on your needs. The latter point is where many people come to us here in San Antonio, Texas, asking for us to be their new broker, as their last one never answered the phone after the sale was done, or never replied to their numerous emails. We strive to assist each and every client with the same urgency before and after the sale, and pride ourselves on living by the Golden Rule in business “treat others the way you want to be treated.”
Prior Authorization: You and/or your prescriber must contact the drug plan before you can fill certain prescriptions. Your prescriber may have to show that the drug is medically necessary, in order for your plan to cover it. If you find that your plan won’t cover the medication in relation to your medical condition, they will likely have alternative medications on their formulary which can be utilized instead.
Quantity Limits: Limits on how much medication you can get at a time.
Step Therapy: In most cases, you must try one or more similar, lower-cost drugs before the plan will cover the prescribed drug.
Prescription Safety Checks At The Pharmacy (Including Opioid Pain Medications): Before your prescriptions are filled, your Medicare drug plan and pharmacy perform additional safety checks, like checking for drug interactions and incorrect dosages. These checks also entail looking out for unsafe amounts of opioids, limitations on supply for opioids, etc.
Medication Therapy Management (MTM) Program: Plans with Medicare prescription drug coverage must offer additional MTM services to plan members who meet certain requirements. Those who qualify, can use MTM services to help them understand how to manage their medications and also use them safely. MTM services are free and usually include a discussion with a pharmacist or health care provider to review your medications.
I Want To Read More About Medicare Part D Plans, Where Should I Go?
We would start with the latest 2020 “Your Guide to Medicare Prescription Drug Coverage” handbook, published yearly by The Centers for Medicare and Medicaid Services (CMS). You can access the ebook-version here.
How Do I Enroll Online?
To sign up at your leisure 24/7, visit our “Enroll Online” page to select the product(s) of your choice, and easily enroll in minutes. And here is the nice part. Even if you self-enroll, we will be your local insurance agency if you ever have an issue or concern. No 1-800 # here, no waiting for the next representative (30 min later…), just a simple call,text, email, or live-chat away!
As you will hear in the short video below from one of our preferred Medicare Part D carriers we work with here in Texas and beyond: Silverscript, if the U.S. Food and Drug Administration (FDA) determines a drug is unsafe for the public to use, your Medicare drug plan will remove the drug from their formulary expediently.
The Harrin Group offers free, comparative quotes on Medicare Part D plans from multiple insurance carriers so you can get the best possible rate.
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Sources: Congress.gov, GoodRx, Medicare.gov, The Social Security Administration, Texas Medicaid, CMS.gov, VA.gov, TRICARE, Indian Health Service, DOL.gov, OPM.gov, Drugabuse.gov, Silverscript