Medicare Part D (Prescription Drugs)

Drug Coverage (Part D)

There are 2 main ways to get Medicare Prescription Drug Coverage.

Stand-alone Prescription Drug Plan (PDP)

These plans add drug coverage to Original Medicare, some Medicare Cost Plans, some Private Fee‑for‑Service plans, and Medical Savings Account plans. You must have Medicare Part A (Hospital Insurance) and/or Medicare Part B (Medical Insurance) to join a separate Medicare drug plan. These plans are purchased through private insurance companies. If you purchase a stand-alone Part D coverage, you are responsible for paying a monthly premium. You may also pay an annual deductible and either copay or a percentage of the cost when receiving prescriptions, according to your plans formulary.

Medicare Advantage Plan (Part C)

Medicare Advantage Plan (Part C) or other Medicare health plan with drug coverage. You get all of your Part A, Part B, and drug coverage, through these plans. Remember, you must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage. You may also pay an annual, premium, deductible and either copay or a percentage of the cost when receiving prescriptions, according to your plans formulary.

What is a drug formulary?

A formulary is a list of generic and brand name prescription drugs covered by your health plan. Your health plan may only help you pay for the drugs listed on its formulary. It’s their way of providing a wide range of effective medications at the lowest possible cost.

You may be asked to pay a copay of $5, $10, $20, or more, depending on the drug. Some drugs are covered at 100%, making your copay $0. You may also be asked to pay a percentage of a brand-name drug listed on the formulary, making your out-of-pocket cost much higher.

Your health plan’s formulary is divided into three or four categories. These categories are called tiers. Drugs are placed in tiers based on the type of drug: generic, preferred brand, non-preferred brand, and specialty. Here’s what typical formulary tiers look like:

    • Tier 1: Drugs are usually generics and have the lowest copays.
    • Tier 2: Drugs will cost you more than tier 1. They include non-preferred generics and brand-name medications.
    • Tier 3: Drugs include generics, preferred brands, and non-preferred brands. Your out-of-pocket price for these drugs will be higher than tiers 1 and 2. Typically you will pay a deductible and your health plan may place a drug in tier 3 if it’s new or if there’s a similar drug on a lower tier.
    • Tier 4: Drugs include generics, preferred brands, non-preferred brands, and specialty drugs. Typically you will pay a deductible. Specialty medications treat rare or serious medical conditions.

Some health plans have more than four tiers and others have only two or three, but they all work the same. Drugs in lower tiers will cost less and those in higher tiers will cost more.

Take a close look at your insurance company’s formularies for each of their plans. A company may list a drug in tier 1 in one plan, but in tier 2 in another plan. What’s more, don’t assume a tier 1 drug for a certain insurance company will be listed as a tier 1 drug for all insurance companies. You may find the same drug on different tiers from one insurance provider to another.

What if my medication is not on my plan’s formulary?

Every insurer has an “exceptions process.” Taking steps to get your plan to cover the drug is easier than you think. You will need to fill out and mail paperwork or submit a form online.

While the exception process may vary from one company to another, they all have the following in common:

  • Your healthcare provider must confirm you need the drug they prescribed.
  • Your doctor must state that your plan’s covered drugs won’t treat you as effectively as the prescribed medication.
  • Your physician believes that your plan’s covered drugs may harm you.
  • Your plan only covers the drug at a lower dosages that’s not effective for you. If you are overweight or obese, for instances, you may need a higher dose that’s not covered by your health plan.

Ask your health plan about temporary coverage during the exceptions process. Your insurer may agree to cover the drug until they make a decision.

If your plan decides to cover the medication long term, it will most likely place it on the highest tier. Be prepared to pay an amount comparable to the most expensive drugs on your plan.

If your plan says no to your request, don’t fret. You still have options. First, your plan must explain their decision. Next, you have the right to appeal the decision. In fact, your insurer is required to tell you about the appeals process. The appeal can take place internally or externally.

What is the Coverage Gap?

Stage 1: Initial Coverage Phase

After you pay your annual deductible (if your plan has one), you pay
A copay or coinsurance for each prescription you fill. Your plan pays the rest. You enter the coverage gap when the total amount you and your plan pay for covered drugs reaches $4,130.

Stage 2: Coverage gap phase

After you and your plan spend $4,430, you pay 25% of the plan’s price for generic and brand-name prescription drugs.

You enter catastrophic coverage when your total out-of-pocket cost reaches $7,050. Only the amount you’ve paid in Stages 1 and 2 and the brand-name drug discount paid by the drug company count toward the total out-of-pocket. (These amounts may change each year)

Stage 3: Catastrophic coverage phase:

After your total out-of-pocket reaches $6,550, you pay the greater of 5% coinsurance or $3.70 copay for generic drugs, and the greater of 5% coinsurance or $9.20 copay for brand-name drugs.

Your plan pays the rest of the cost of your prescription drugs for the rest of the calendar year (until Dec. 31).

During this time may drug manufactures discount the price of “Brand Only” drugs and pay 75% in the Coverage gap.

Need help selecting a Prescription Drug Plan (Part D)? Either give us a call below or fill out our contact form by clicking here.


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