An overview of Medicare Prescription Drug Part D
Medicare Part D helps pay for the prescription drugs you use. Medicare Part D coverage is not automatic. You must enroll in a Medicare Part D plan if you want coverage.
The federal government has created guidelines for the types of drugs that must be covered by drug plans and has set minimum standards of benefits. Insurance companies that offer Medicare Part D plans must meet these standards. But all plans are not the same. Costs and drugs coverage vary by plan.
What pharmacies can you use?
Each drug plan decides which pharmacies plan members may use. Plans may limit your choice of pharmacies by geographic area, such as a state, or offer nationwide coverage. If you travel often, you may want to consider a plan that allows you to access pharmacies wherever you go.
Some plans also offer mail-order services, so you can have drugs mailed to your home.
Each Medicare Part D plan has a service area—the area where it operates. You must live in a plan’s service area to enroll.
The insurance companies that offer Medicare Part D drug plans (and Medicare Advantage Plans with drug coverage) set their own prices. Monthly premiums for drug plans can vary widely, even for similar coverage.
Each year in October, the insurance companies announce premiums and other details of their plans for the coming year.
Important: If you don’t sign up for Medicare Part D coverage as soon as you are eligible, you may pay a penalty on your premium, unless you qualify for an exception. This penalty is set by Medicare. For each month you delay, you may pay an additional 1% (of the average premium) per month. You will pay that penalty for as long as you’re enrolled in Medicare Part D.
Medicare Part D Cost sharing
STAGE 1 – Medicare Part D Deductible
Some plans charge an annual deductible and some don’t.
STAGE 2 -Medicare Part D Copay/Coinsurance
Some drug plans charge a copay each time you fill a prescription. You could pay a percentage of the cost (called “coinsurance”) each time you refill a prescription.
Stage 3 – Medicare Part D Coverage gap
Coverage Gap (Donut Hole):
This stage begins once you reach your Medicare Part D plan’s initial coverage limit and ends when you spend to meet the annual out-of-pocket maximum.
Stage 4 – Medicare Part D Catastrophic Coverage
Medicare Part D catastrophic coverage is the phase that occurs after a person meets their maximum OOP expenses. As an EXAMPLE, In 2021 that maximum expense is $6,550. In the catastrophic coverage phase, individuals pay significantly less for their prescription medications.