Medicare Prescription Drug Plans
Prescription Drug Plans Made Easy
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 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.
Initial coverage limit
You enter the donut hole after you surpass the initial coverage limit of your Part D plan. The initial coverage limit includes the total (retail) cost of drugs — what both you and your plan pay for your prescriptions.
After surpassing this limit, you’ll need to pay a certain percentage yourself until you’ve reached what’s called the OOP threshold.
For 2021, the initial coverage limit is $4,130. Generally speaking, this means that you’ll be able to get more medications before you fall into the donut hole when must pay more yourself.
This is the amount of OOP money that you have to spend before you exit the donut hole.
For 2021, the OOP threshold is $6,550. This is what you’ll have to pay OOP in order to get out of the donut hole.
When you’re in the donut hole, certain things count toward your total OOP cost to exit it. These include:
- OOP costs for generic and brand-name drugs while in the donut hole
- discounts on brand-name drugs while you’re in the donut hole, which includes a coverage gap discount plus a manufacturer discount
- your yearly deductible: $445 in 2021
- any copayments or coinsurance
Originally, being in the donut hole meant that you had to pay completely OOP until you reached the threshold for more drug coverage. However, since the introduction of the Affordable Care Act, the donut hole has been closing.
Although the donut hole is being phased out, in 2021 you’ll still have to pay a certain percentage OOP once Medicare reaches its coverage limit.
In 2021, you must pay 25 percent of the cost for both generic and brand-name drugs while you’re in the donut hole. For both generic and brand-name drugs, only a certain amount of the cost counts towards your OOP threshold.
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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Upon completing a tour in the US Air Force (1966-1970) and a career in the Railroad Industry as a Switchman, Brakeman, Conductor, Fireman, and Locomotive Engineer (1971-2006) I felt the desire to follow in my father’s footsteps and enter the Texas Medicare insurance industry.
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