What is Part D, Medicare Prescription Drug Coverage?
Medicare Part D is your prescription drug coverage and it helps cover the cost of your prescription drugs. It is run by Medicare-approved, private insurance companies.
How to Enroll in Part D, Medicare Prescription Drug Coverage
There are two ways to enroll in Medicare Part D drug coverage:
Original Medicare with a stand-alone drug plan
Medicare Advantage plan
Most Medicare drug plans have their own list of covered drugs, known as a formulary. Each formulary has tiers or levels, with the lower tiers representing the lower-cost medications.
A great resource for finding a drug plan is on the Prescription Drug Plan Finder located on the Medicare.gov website. It can be used to find a plan that suits your medication needs. It is important to understand how drug coverage works.
What is the Donut Hole or Gap?
Most Medicare drug plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. It is broken down into stages.
Stage 1-Annual deductible: If your plan charges a deductible, it is the amount you pay before your coverage begins (in 2020, up to $445).
Stage 2-Initial Coverage Period: When the total cost of your drugs for the given year (including what you have paid and what the plan has paid) reaches $4,130 (2020), you move into the coverage gap, or “donut hole,” which is a temporary limit on what Part D will pay for medication.
Stage 3-Coverage Gap or “Donut Hole:” For the coverage gap in 2020 you will pay 25% of the retail cost of brand-name and generic drugs. How you move out of the coverage gap is determined by adding together the deductible, coinsurance and copayments, what you have paid in the coverage gap and the discount you received on your covered brand-name drugs while in the coverage gap.
Stage 4-Catastrophic Coverage: When the total reaches $6,550 (in 2020) you will pay no more than 5% of the cost of the drug until the end of the year.
Penalties to Avoid
If you purchase your prescriptions at an “out-of-network” pharmacy, chances are you will pay more for your drugs and you may end up in the coverage gap sooner than expected. Also, do not delay in enrolling in a Part D drug plan. If you miss your Initial Enrollment Period when you are first eligible, you may pay a penalty that will stay with you for the rest of your life.
If you have “creditable” drug coverage through an employer you may not need to sign up for Part D when you turn 65. If you lose the coverage, you’ll have 63 days to enroll without a penalty.
Help Paying for Part D Drug Costs
If you have limited income and resources, you may qualify for Extra Help paying for your prescription drug costs. Extra Help is a Medicare program designed to help people pay their Medicare prescription drug costs. There are income and resource limits to qualify. For more information or to apply, call Social Security at 1-800-772-1213 or visit SSA online.