Prescription drug plans or Part D pf Medicare was designed to offer prescription drug coverage to everyone enrolled in Medicare
Created in 2006 with the passing of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
There are 2 ways to receive coverage:
- Standalone policy purchased through a private insurance company in conjunction with Original Medicare
- Purchased alongside or with a Medicare Advantage Plan
Either way that is selected the plans are still labeled as “Medicare drug plans”
What Part D covers:
Each plan has its own list of covered drugs (called a formulary). Many Medicare Part D plans place drugs into different “tiers” on their formularies. Drugs in each tier have a different cost. Currently there are 5 “tiers”, they are;
1) Tier 1 Generic Drugs
2) Tier 2 Some Brand Name Drugs and some Generic Drugs
3) Tier 3 All Brand Name Drugs
4) Tier 4 and 5 medications are chosen by the Insurance Companies to be not subject to any of the rules and regulations set forth by Medicare.
What are the costs of Part D:
- The price of the premiums varies by residency, medications covered and by the insurance company that administers the plan.
- If part of a Medicare Advantage Plan the monthly premium paid may include the amount for prescription drug coverage.
- In 2018 the national average premium is $52.52 a month.
Please note: Part D premium is also subjected to Medicare’s Income Related Monthly Adjustment Amount (IRMAA) that places a surcharge on top the current premium for retirees who happen to be earning too much income
- When enrolling into a Part D plan there is always an option to select a plan that comes with a deductible or not.
- Within most states, having a Part D plan with a deductible equates in a lower monthly premium.
- The national average deductible in 2018 is 389.00 a month
- The deductible is charged when purchasing any prescription medications
- Copayments or coinsurance
- Set by the insurance company that administers the plan.
- Co-pays are typically a dollar amount between $1.00 to $50.00 for each prescription filled depending on the tier of medication.
- Co-insurance is a percentage of the overall cost of the prescription that is determined by the tier of medication. The percent ranges from 25% to 50% of the total cost of prescription.
Who is eligible for Part D coverage:
- Available at age 65.
- No longer covered by a creditable health insurance plan through an employer or spouse’s employer and at least 65 years-old or older.
- Must have enrolled into Medicare Part A and / or Part B.
- Must live in the plan’s service area (can’t have a different state’s plan).
- If covered with an Advantage Plan must be covered for Parts A & B.
Note: You can NOT have more than one Part D plan at a time.
Those that live outside of the US & territories and those incarcerated are NOT eligible
When is enrollment to join Part D:
- Open enrollment is October 15 thru December 7 for those who are new to Medicare or who would like to make a change to any existing plan.
Initial Enrollment Period (IEP):
- The period when thee is no longer creditable health coverage through an employer or spouse’s employer.
- Must be at least 65 years-old.
- IEP is for 60 days from when previous health coverage ended.
- NOTE: COBRA does NOT count as creditable health coverage.
- Jan 1 thru Feb 14 to leave an Advantage Plan & switch back to Original Medicare – may also join a Drug plan.
- Available to anyone who changes residency out of their coverage area.
- Available if a credible medication is no longer covered by the plan (the plan was cancelled by the provider).
- Available to anyone who enters or leaves a Long-Term Care facility.
- Available to anyone who qualifies for extra help or loses the status of needing extra help.
- If available in coverage area anyone can enroll one time only at any point per year in any plan that is ranked by CMS as a 5 star.
What happens if enrollment is delayed or coverage is dropped:
- An amount added to any Part D plan premium for those who are found to being late in enrolling into a plan.
- Penalties start after 63 days without continuous coverage which include Initial Enrollment Period or if coverage is dropped
- Penalty is calculated by multiplying 1% to the number of months missed and then multiplied again to the National Base Premium (in 2018 the base premium is $35.02).
- This amount is then added to the monthly premium and is automatically deducted from any Social Security benefit being received.
An example of the late enrollment penalty
Person A went without coverage for 7 months. The penalty is 7 months multiplied by 1% and then multiplied again to National Base Premium of $35.02 or 7% x 35.02 = $2.45 a month.
NOTE: Late enrollment penalties never go away and will be reassessed each year based on that current year’s National Base Premium.
Finding a Part D prescription drug plan:
Medicare provides a resource through its site at www.medicare.gov/find-a-plan/questions/home.aspx