Medicare Part D plans cover the cost of prescription drugs for Medicare recipients. This prescription coverage is provided by private insurance companies not the government. These private companies must be approved by CMS.
If you would like Medicare to cover your prescription drugs, you have two choices.
- Enroll in one of the Medicare Part D plans.
- Enroll in a MA-PD.
Medicare Part D Coverage
You are eligible for Medicare D if you are already enrolled in either Medicare Part A, or Part B or both. If you have other plans, such as: Medicare cost plans, Private Fee for Service plans, or a Medicare Savings Account plan, you may still be eligible for Medicare drug coverage.
You should enroll in a Medicare drug plan as soon as you are eligible. If you wait to enroll, you will pay a late enrollment fee and have higher premiums.
You can enroll later if you have creditable drug coverage. Creditable drug coverage does not include discount cards, manufacturer sponsored pharmacy assistance programs, doctors samples, free clinics and drug discount Websites.
Costs and coverage are different among Part D plans. However, all plans must offer standard level of coverage defined by CMS.
Most drug plans charge a monthly fee for this coverage. This fee varies with each plan, and it is in addition to the Part B premium.
MA-PD is short for: Medicare Advantage Plans with Prescription Drug Coverage. This is Medicare Part C with included drug coverage.
Medicare Advantage (MA) plans, in general, offer more coverage than traditional Medicare. However, not all MA plans carry prescription drug coverage. So, if you need prescription coverage, you have to find a plan that explicitly has it. When you include prescription coverage, your premium cost will increase.
Do not mix up Medicare Advantage Plans with Prescription Drug Coverage with Medicare Part D plans. You choose one or the other. But just to be confusing, you can have a Medicare Part C plan with no drug coverage and supplement it with on of the Medicare Part D plans.
One of the costs that varies among Medicare Part D plans is the yearly deductible. This is the total amount you must pay for you prescriptions before your plan will pay. For example, you will have to pay the first $200 in drugs before the plan starts paying. Some plans have no yearly deductible.
Co-payment or co-insurance is another cost. This occurs after payment of your deductible. You may still have to pay for part of the medication.
This cost occurs when you fill your prescriptions. At that time, you pay your share (co-pay) to the pharmacy. The pharmacy then bills the insurance company for the rest of the cost.
Medicare Part D Donut Hole
Most Medicare drug plans have a coverage gap. This is commonly known as the Medicare Part D Donut Hole. When your drug purchases exceed a certain amount, the drug plan no longer pays. At this point, you will have to pay for your prescriptions yourself. You will continue to pay for these prescriptions until you reach a yearly out-of-pocket limit.
For example, Part D Medicare will cover the cost of your medication up to $2970. Then it will not pay anything until your out-of-pocket cost exceeds $4750. Then the plan will pay 95% of all further costs. You must pay the other 5% or $2.65 for generic drugs, or $6.60 for brand name drugs, whichever is greater.
The items counted toward the yearly out-of-pocket limit are your out-of-pocket costs, your yearly deductible and any co-payments or co-insurance. However, your monthly premiums are not counted toward this limit.
Pricing Medicare Part D Plans
Medicare Part D plans vary in cost and benefits. You have many choices for prescription coverage under Medicare. Understand the costs involved. These are the premium, yearly deductible and the co-payments or co-insurance. Compare the total costs.
The government website has a plan finder which you can use to help you decide. You can also check the sponsors of this site.. Just be sure that when you review plans, you understand all the costs.