Understanding Your Prescription Drug Coverage
Medicare has an optional program — called Medicare Part D — that provides insurance to help you pay for prescription drugs. If you select to have the coverage, you pay a monthly premium. This guide explains how the program works and helps you make decisions in choosing a plan that's right for you.
Prescription Drug Plans
- What Is It? Medicare Part A and Part B does not include coverage for prescription drugs at the pharmacy. Fortunately, the government has allowed certain private insurers to offer Medicare Prescription Drug plans (also known as Medicare Part D).
- There are two types of Part D plans. The first type is Medicare Advantage Prescription Drug Plans (MAPDPs). This type of coverage is included as part of a Medicare Advantage plan, so you will only be able to access this plan’s coverage if you enroll in a Medicare Advantage plan (also known as Medicare Part C).
- The other type is standalone Prescription Drug Plans (SPDPs). This is the type of coverage you get separately along with Medicare Part A and Part B. So, you have two choices for drug coverage: Medicare Part A, Part B, and a standalone prescription drug plan (Medicare Part D), or Medicare Advantage with a Medicare Advantage Prescription Drug Plan.
- Why Get It? Paying for prescription drugs out-of-pocket can be very expensive. If you are currently taking medication, or think you may need to, it is highly recommended to get a Medicare Prescription Drug Plan.
- Who Is Eligible? You must be eligible for Medicare Part A and Part B to get a Medicare Prescription Drug plan.
- When Can I Enroll? Both Medicare Advantage Prescription Drug Plans and Standalone Prescription Drug Plans are best purchased during the Initial Enrollment Period or the Open Enrollment Period
- The Initial Enrollment Period is the 7-month period surrounding your 65th birthday -- 3 months before you turn 65, the month you turn 65, and 3 months after you turn 65. If you fail to get coverage during this time, you could face having to pay the Medicare Part D penalty. Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($35.63 in 2017) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
- After the Initial Enrollment Period, the next time you can enroll in a prescription drug plan is the Open Enrollment Period, which begins on October 15 and ends on December 7. You may also switch Prescription Drug plans during the Open Enrollment period if you are already enrolled in one and would like to change plans.
- Lastly, it may be possible to enroll in a Prescription Drug plan during the Special Enrollment Period. It is important to remember that the Special Enrollment Period is only open to those who recently had a major life change, such as a move or a loss of health coverage.
- Since Special Enrollment is limited, it is important that you do not miss the Initial or Open Enrollment Periods. Your coverage start could be delayed, and you could also face paying a penalty for not having coverage. As of 2017, the penalty is $35.63 times the numbers of months you went without coverage. For example, if you went 36 months without Part D, you would have to pay $1,282.68 for the year.
- How Much Does It Cost? Monthly premiums for Medicare Prescription Drug Plans vary by carrier, plan, the state you live in, and the prescription drugs you require. Premiums for MAPDPs (those that go with Medicare Advantage plans) average around $5-$20*** per month, but can start as low as $0*** per month. SPDPs (those that go with Medicare Part A and Part B plans) start around $11.40*** per month.
- The deductible, or the amount you have to pay before the plan kicks-in, can also greatly vary. However, by law, your deductible cannot exceed $400 per year in 2017. Many plans may have deductibles that are even more affordable.
- Also, it is important to note that once your total prescription drug costs exceed $3,700, the insurance temporarily pays less -- 60% for brand name and 49% for generic drug costs -- for the next $1,740 in drug costs. This coverage gap is known as the "Part D Donut Hole." After that, the plan kicks back in as catastrophic coverage and starts paying for nearly all of the new costs.
- When shopping for a plan, it is important to compare plans side by side, and by formulary. The formulary is the exact drugs that the plan covers, and different formularies have different costs.
- How to Enroll? You can compare Medicare Prescription Drug options here on Medicare2018.org! You can apply once you find the right plan for your needs. To begin, just enter your zip code and tell us about yourself.
- Learn more about Medicare Prescription Drug Plans here.
The Medicare Drug Plan: 6 Key Facts
Anyone who has Medicare Part A or Part B (or both) can get Part D coverage regardless of income or health.
You are not obligated to enroll, but there may be consequences (such as permanent late penalties and delayed coverage) if you don't sign up when you are first eligible to do so.
To get Medicare drug coverage, you must select one approved private drug plan among many offering different choices. There is no single government plan.
Is your income limited? If you qualify for a part of the program known as "Extra Help." you'll pay very little for your medications.
Are your drug costs very high? You'll pay no more than 5 percent of the cost of each prescription after you've spent a certain amount of money out-of-pocket in any one year.
Do you have better drug coverage already? You probably won't need Medicare's Part D coverage. But it's wise to check.