Medicare includes several different parts, one of the most important being Medicare Part D. This supplemental plan covers prescription drugs. Those eligible for Medicare, usually people age 65+ and the disabled, may have several different medications necessary for health maintenance.
Understanding how Medicare Part D plans affect you is important, and digging through the details of your coverage plan is going to help save you time and money.
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Important Facts About Medicare Part D Drug Coverage
- If you’re eligible for Medicare, you can enroll in Medicare Part D supplemental coverage
- No physical exams are required
- You cannot be denied Medicare prescription plans if you qualify for Medicare
- You can combine Medicare Part D with other Medicare insurance programs
- Enrollment is voluntary
- You must not enroll in Medicare Part D if you are enrolled in a Medicare Advantage Plan
What Is Medicare Part D Supplemental Insurance?
Sometimes referred to as "Medicare Part D prescription drug plans" or Medicare PDP, these plans are supplements to Medicare Part A and Medicare Part B that help you manage the costs of brand name and generic prescription drugs.
While this coverage is optional, if you don’t have any additional assistance to cover your prescription drugs, you can otherwise end up paying for expensive medications out of pocket. Luckily, Medicare works with many insurance companies to provide a variety of plans to suit your needs.
Medicare organizes medications into “tiers,” and each tier has a different price. The more expensive prescriptions you have, the higher your premium may be.
If you’re enrolled in a Medicare Advantage Plan (Part C) you already have prescription drug coverage, and you do not need Medicare PDP. If you are unsure what coverage you have, ask your insurance agent or insurance company representative.
Note: It is very important to know that if you already have prescription drug coverage through a Medicare Advantage Plan when you enroll in Part D, your insurance company will be required to remove your previous prescription drug coverage and adjust your premiums accordingly.
Medicare Part D Supplemental Insurance Costs
Some aspects of Medicare do not require you to pay, but drug plans for Medicare do come with a premium. Compared to retail pricing for prescription drugs (without insurance), the premiums are affordable.
An average premium in 2020 was $42, but prices will vary according to plans and insurers. If you make more than $85,000 per individual or $170,000 per couple per year, you will likely pay a higher premium.
Premiums aren’t the only out-of-pocket costs associated with Medicare Part D programs. You might have a deductible that must be met before your plan pays for your prescriptions.
In 2020, the maximum deductible was $435. After your deductible is met, you may have a co-pay amount set in advance, or a coinsurance amount to pay with each prescription.
If you can’t afford to pay for any of your Medicare prescriptions, you can apply for “Extra Help.” This portion of Medicare Part D supplement coverage provides assistance to individuals with low and limited incomes. If you qualify, you won’t pay premiums and, depending on the drug, co-pay amounts can be less than $7.
What Is the Medicare Part D Coverage Gap?
If you don’t qualify for assistance but still have many prescriptions, you may find yourself caught in what is called a “coverage gap.” Part D coverage comes with a benefit limit.
When the total drug costs that you and your insurer pay surpass a certain amount, you will have entered the coverage gap. In 2020, the limit was $4,020.
After you reach the limit, you will have a 25% copay. Once you reach the out of pocket limit ($6,350 in in 2020) your catastrophic drug coverage will begin and you will have a much lower copay for the rest of the year.
How to Compare Part D Medicare Plans
You’ll want to take an inventory of your current medications and be familiar with their costs when looking for a prescription plan. Medicare Part D insurance companies offer a variety of plans and levels.
It can still be challenging to find the right plan for you, especially if you’re combining different aspects of Medicare or other private insurance plans. When you work with an independent agent, you’ll get the best service possible from someone who specializes in health insurance.
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