Understand how Medicare Part D works

Understand how Medicare Part D works

Medicare Part D is a subsidized prescription drug program backed by the US Federal government that provides anyone on Medicare access to medications at reduced rates.  The premium for a Part D drug plan averages to about $15-$35 a month. If you don’t sign up for a drug card when you first become eligible, and decide later on to enroll into one, you are assessed a 1% penalty for every month you didn’t have the plan in effect going back to your date of eligibility.  All Medicare Part D plans must have the basic benefits required by Medicare, since it is regulated by the government.

How much does Part D cost?

Depending on the plan you may or may not have a drug deductible to meet which can be as high as $320/year. The higher the plan d premium, the less chance you will have a deductible to meet.

Most Part D plans cover drugs based on a 4 or 5 tier system. You pay a co-pay or coinsurance for your medication depending on which level or tier it falls under.

You pay your set out-of-pocket expense for each drug you take until you and your plan together, are out-of-pocket $2930 for the year for your medications.

At which time you’ve entered what’s called the “Coverage Gap” or “Donut Hole”. Once your Part D plan and you come out-of-pocket $2930 for the year excluding premiums for your medications then you’ll get a 50% discount on brand drugs that are covered by the plan.

For generic drugs that are covered by Part D you will be responsible for 86%. The good news is the 50% discount on brand drugs is also counted towards your out-of-pocket, which will help you close the coverage gap even quicker.

Once a senior totals $4700 in out-of-pocket expenses for Part D covered medications between themselves and the plan, then the insured enters what is called “Catastrophic Coverage”. This is when you will pay a small co-pay or coinsurance for each drug until the end of the year.

What kind of medications are covered by Part D?

While most prescription drugs are covered by Part D of Medicare, there are some types of medications that are not covered.

  • Medications that are not approved by the FDA
  • Prescription medications not available to sell in the United States
  • Medications which are covered under Part A or Part B of Original Medicare

The following medications may also not be covered they a Part D drug card, although any drug plan can cover them as extra benefit if they wish.

  • Any medication use for weight loss or weight gain
  • Fertility medications
  • Medications for sexual disorders such as erectile dysfunction
  • Drugs used for cosmetic purposes such as Rogaine for hair growth
  • Medications for the common cold or cough

Medicare Part D Drug Formularies

You might be surprised to find out that Part D prescription drug plans are not required to cover all Medicare approved medications. Every drug card for seniors has a different but similar or medication list. The Part D drug plans can set their own drug formulary as long as they follow the established guidelines set by the United States Pharmacopoeia.

What you will want to do if you take any medications currently sit down with a  list of your medications, and figure out what your co-pays would be for the top three drug plans in your county. You can also utilize a insurance agent who is contracted with Part D companies to assist you with drug plan comparisons at no additional cost to you whatsoever.

Medicare Part D Enrollment

When you first become eligible for original Medicare Parts  A and B, you have seven months to sign up for a Part D drug plan. During that time you can not be declined for a drug card based on your health history -you are what’s called guaranteed issue.

If you elect not to sign up for drug plan when you first become eligible, but decide later down the road to sign up for one you would pay a Medicare Part D penalty of 1% for every month you didn’t have the Part D plan but were eligible.

An example of this would be if Jane turned 65 and in October declined to purchase a part D drug card then one year later decided she needed to have a prescription drug card dealt with the rising cost of for medications she would be responsible for a 1% penalty for every month since her open enrollment ended. Since you’re open enrollment is a total of seven months that’s three months before your birthday the month of your birthday and three months afterwards her penalty would start on month of February. So she would have a 9% penalty, at her drug plan of choice is $30 a month then she would paying after $2.70 after penalty.

How do I get Medicare Part D?

You will find that there are two ways to get Part D benefits as a Medicare beneficiary you can either purchase a standalone Part D drug plan such as an AARP Medicare Rx Plan to go along with your Medicare supplemental insurance plan or you could sign up for one of the many popular zero premium Florida Medicare Advantage plans which most of them will include your Part D drug benefits and and all in one plan.

When can I sign up for a Medicare Part D drug card?

Outside of your open enrollment?  Every year there’s an annual enrollment period between the months of October and December, this is when you can change drug plans and your change would go into effect the following January. When you turn 65 you are able to enroll into Medicare prescription drug plans, at the same time as Part A and Part B of  Original Medicare.

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