What does Medicare Part D cover?
Medicare Part D plans are required by the federal government to cover certain common types of drugs, but each individual Part D or Medicare Advantage plan can choose which specific prescription drugs of each type it will cover. These may include brand-name and generic prescription drugs. The specific prescriptions you take may not be covered by all Part D plans. You should review each Part D plan’s drug list, or formulary, to see if they cover your prescriptions.
Medicare Part D plans cover:
- Common types of drugs most generally prescribed for Medicare recipients as determined by federal standards
- Specific brand name and generic prescription drugs on the plan’s list of covered drugs, or formulary
- Drugs that are not on the plan’s drug list
- Drugs that are covered under Part A or Part B
- Medicare excluded drugs
What does Medicare Part D cost?
Most Part D plans charge a monthly premium. Other Part D costs may include a yearly deductible and then co-pays or co-insurance each time a prescription is filled. The specific amount you may pay differs from plan to plan and depends on what tier your specific prescriptions fall into on the plan’s drug formulary. The insurance companies that offer Medicare Part D drug plans and Medicare Advantage (Part C) plans with drug coverage set their own prices, but the types of costs they include are similar. The information below shows the types of costs that plans may apply.
Per month: Plan premiums vary. You still pay the Part B premium to Medicare (and the Part A premium, if you have one).
Per Year: Some plans charge an annual deductible, and some don’t. Plans may apply separate deductibles for different formulary tiers.
New prescriptions and refills: Some plans charge co-pay each time you fill a prescription. Amounts vary.
New prescriptions and refills: Some plans charge a percentage of the cost when you fill a prescription.
Part D plan premiums and costs can vary, even for similar coverage. Many plans have pharmacy networks. Generally, you pay less for prescriptions filled at network pharmacies. Some plans have mail-order pharmacy benefits that may offer additional savings. You need to review plan details carefully.
How Medicare Part D cost sharing works
Medicare Part D has different stages of cost sharing until you reach a set limit on out-of-pocket costs for the year. The limit is $6,350 in 2020. After your out-of-pocket limit is reached, your plan pays most of the cost of your drugs for the rest of the year. Co-pays, co-insurance amounts and your plan deductible, if any, count as out-of-pocket costs. Premium payments do not.
The cost-sharing stages of Part D plans are explained below. The costs shown are for 2020. You may not go through every stage in any given year. If you qualify for Extra Help for Part D costs, the coverage gap stage doesn’t apply to you.
Part D coverage is broken into four stages. You pay a share of the cost for your drugs in each stage. The stages progress based on how much you and your plan pay, up to set limits. This cost-sharing cycle restarts at the beginning of each year.
1. Annual deductible:
- You pay 100% of the cost up to the plan deductible amount.
- Not all Part D plans have a deductible.
- If your plan does not have a deductible, your coverage starts with the first prescription you fill.
- You pay copays or coinsurance up to a set limit
- You stay in this stage until your total prescription drug costs (what you pay and what your plan pays) reach $4,020 in 2020.
- For brand name drugs you pay 25% of the costs.
- For generic drugs you pay 25% of the costs.
- You pay a percentage of the cost in this stage until you reach an out-of-pocket limit $6,350 in 2020.
- You pay a small coinsurance or copay amount.
- You are in this stage for the rest of the Part D plan year.
Who can get Medicare Part D?
Everyone who is eligible for Medicare is also eligible for Part D prescription drug coverage. In general, you may enroll in a Part D plan if you are entitled to Medicare Part A or if you are enrolled in Medicare Part B. In addition, you must live in the service area of a Part D plan.
Enrolling in a Medicare Part D plan
You can choose to join in a standalone Part D plan or a Medicare Advantage plan with drug coverage when you first become eligible for Medicare. You can also enroll in a plan or change plans during the Medicare Annual Enrollment Period, which occurs every year from October 15 through December 7. You want to sign up for Part D as soon as you become eligible. Unless you qualify for a Special Enrollment Period, you might be charged a late enrollment penalty if you delay enrollment.