Medicare Prescription Drug Plans
Prescription Drug Plans Made Easy
Medicare Prescription Drug Plans
Unlike private health insurance plans, Original Medicare (Medicare Parts A and B) does not cover prescription drugs. Medicare Part D was established in 2003 to provide prescription coverage for Medicare enrollees and requires buying a private prescription plan.
There are a few avenues for obtaining prescription coverage once you’re eligible for Medicare, which is typically age 65 (or younger if you meet disability qualifications). The options are:
- A stand-alone Medicare Part D Prescription Drug Plan, which can be used in tandem with Original Medicare
- A Medicare Advantage plan that includes Part D prescription drug coverage (these Medicare Advantage plans are known as MAPDs). The majority of Medicare Advantage plans are MAPDs.
- Supplemental coverage from Medicaid (the coverage will be via Part D) or your employer or a spouse’s employer (including retiree coverage that’s considered comparable to Part D coverage).
Ashford Insurance can help you get the prescription coverage you need.
Medicare Prescription Drug Plan (Part D). These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
Medicare prescription drug coverage is an optional benefit offered to everyone who has Medicare.
Medicare Part D Prescription Drug Plans is coverage for retail prescription drugs or the medications that you pick up at a pharmacy. This is a voluntary program that allows you to access medications at an affordable rate and insures yourself against any prescriptions you may need in the future.
All Medicare Prescription Drug plans cover the types of drugs most often prescribed for people enrolled in Medicare. This is decided by the U.S. government. But it’s up to each plan which specific brand name and generic drugs they will cover within those types. You can find this information by viewing a plan’s drug list.
Medicare Part D costs vary depending on the specific drug plan chosen. Generally, you are responsible for paying a monthly plan premium, and then deductibles and copays (or coinsurance) for your medications. People with higher incomes may have to pay more for the cost of their plan.
Two ways to get prescription drug coverage
- Medicare Prescription Drug Plan (Part D). These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
Medicare Advantage Plan (Part C) like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.
- There are many Texas Medicare Part D plans to choose from, with plans ranging from $15.00 – $100.00 on up. Choosing your drug plan should never be based purely on the plan’s monthly premium because every plan has its own separate premium, drug formulary, and copay. Just enrolling in the cheapest plan without checking the plan’s formulary could lead you into paying higher out-of-pocket costs for the year. This could be an expensive mistake, especially if you learn later that the plan does not cover one of your medications. Remember, the least expensive monthly premium is not necessarily the least expensive plan when figuring in total prescription costs. Also, do not forget, all Part D plans, the benefits, formulary, pharmacy network, provider network, premium, and/or copayments/co-insurance may change on January 1 of each year.
The federal government offers extra help with paying for your Part D drug plan and paying for your medications if you qualify and is based on income. This is what is called a Low-Income Subsidy. Anyone can apply for this from Social Security at any time. Help is only awarded based on proving low-income and limited resources. You must have an annual income that falls below 150% of the Federal Poverty Level based on your household size.
Beneficiaries who qualify may receive assistance with paying their monthly Part D premiums, their annual Part D deductible, and also their co-payments on retail medications. There are different levels of qualification, and your subsidy level generally determines how much assistance you will get towards your premiums. Someone qualifying with a full subsidy would have 100% of their Part D premium paid for, up to the benchmark allowed by Medicare for that particular year.
A drug list—sometimes called a formulary—is a list of drugs covered by a plan.
A drug list can change from year to year.
Part D plans may add or remove drugs from their drug list each year. Changes may also be made during the year, for example, if a drug is taken off the market. Your plan will let you know if a change affects a drug you are taking.
Many Part D plans have a tiered drug list where drugs are divided into groups based on cost.
In general, drugs on low tiers cost you less than drugs on high tiers. Plans may charge a deductible for certain drug tiers and not for others, or the deductible amount may be different depending on the tier.
There are rules for some prescription drugs that limit how and when a plan will cover them. These are called requirements or limitations. If you don’t follow these rules or don’t get permission from the plan saying you don’t have to (called an exception), you may have to pay the full cost of the drug out of your own pocket.
WHAT IS ‘THE DONUT HOLE’?
The Medicare Part D coverage gap, also known as the “donut hole” is a benefit structure that applies both to stand-alone Medicare Prescription Drug Plans and Medicare Advantage Prescription Drug plans, however, not everyone enters it. If you’re presently or will sometime in the future be taking medications or are concerned about lowering your prescription drug costs, it may be helpful for you to understand what the Medicare ‘Donut Hole’ is and ways to avoid it.
2022 Donut Hole (Coverage Gap) Explained
The coverage gap commonly referred to as “The Donut Hole” has several phases.
The coverage gap is a temporary limit on what most Part D Prescription Drug Plans or Medicare Advantage Prescription Drug plans pay for prescription drug costs. While you’re in the coverage gap, you might pay higher costs for brand-name and generic drugs. Below we’ve described each phase:
Deductible phase: For most stand-alone Medicare Prescription Drug Plans and Medicare Advantage Prescription Drug plans, you’ll pay 100% for medication costs until you reach the yearly deductible amount (if your plan has one). The standard deductible for 2022 is $480.
Initial coverage phase: After you’ve reached the deductible, you’ll enter the initial coverage phase, where you will pay the plan’s cost share for covered medications. For example, if your plan benefit includes a 25% coinsurance in this phase and you’re taking a medication that costs $400 a month, your out-of-pocket cost would be approximately $100 a month.
Coverage gap, also known as the “donut hole”: begins if you and your plan spend a combined $4,430 in 2022 as described above. While in the coverage gap, you’ll typically pay 25% of the plan’s cost for brand-name drugs and for generic drugs in 2022. You’re out of the coverage gap once your yearly out-of-pocket drug costs reach $7,050 in 2022.
Catastrophic coverage phase: Begins if your out-of-pocket costs reach $7,050 in 2022. During the catastrophic coverage phase, you’ll only pay a small coinsurance or copayment for covered prescription drugs for the remainder of the year.
Learn about the Medicare Part D Late Enrollment Penalty Here
What happens after I exit the donut hole?
After you exit the donut hole, you’ll receive what’s called catastrophic coverage. This means that you’ll have to pay whatever is greater for the rest of the year: 5 percent of a drug’s cost or a small copay.
The minimum copay for 2021:
- Generic drugs: minimum copay is $3.70
- Brand-name drugs: minimum copay is $9.20
Some Texas Medicare Advantage Prescription Drug plans and stand-alone Medicare Prescription Drug Plans provide partial or full coverage during the coverage gap. For example, some plans may not have a gap at all, while others may offer generic drug coverage in the gap. Plans with gap coverage may charge a higher monthly premium, so you should only consider one of these plans if you have high prescription drug costs and know you will reach the coverage gap.
There is a Late Enrollment Penalty for not having creditable prescription coverage.
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Ashford Insurance is an independent health insurance agency specializing in Texas Medicare insurance and has been helping seniors since 2005. Ashford Insurance is here to help you understand Medicare and health insurance in simple, plain terms that anyone can grasp. We specialize in assisting folks who are Medicare eligible to learn about the coverage options available through the Medicare Health Insurance Program.
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