Medicare Part D

What is Medicare Part D? It provides prescription drug coverage through a private insurer under the rules and regulations set by the federal Medicare program. The program was added in 2006 as a way to help Medicare beneficiaries avoid paying out of pocket for prescription drug costs. 

Medicare Part D plans are optional, but they can significantly lower the yearly cost of prescription drugs when the right plan is selected for the patient’s specific needs. Different plans provide different levels of coverage according to the plan’s respective drug formulary.

Note that many Medicare Part C plans contain a prescription drug component, negating the need for Medicare Part D. In fact, enrolling in Medicare Part D when you already have drug coverage from Part C can cause you to get disenrolled from Part C automatically, so be cautious when adding or modifying plans.

The amount you pay for your Medicare Part D cost depends on the plan selected, its drug tabularly, your monthly premium, your deductible, and any cost insuring you must pay in coinsurance.

What Does Medicare Part D Cover?

Speaking generally, Medicare Part D provides prescription drug coverage, usually for both name-brand versions of a drug and generics.

What drugs are covered by Medicare Part D? That can vary dramatically depending on your specific plan and the plan’s drug formulary. Drug formularies can also change over time, so keep an eye out for notices regarding coverage changes from your Medicare Part D plan provider.

Even though drug formularies vary, the Medicare Part D program sets a general rule that at least 2 versions of a drug in a commonly prescribed category are covered. This rule ensures that, for the most part, beneficiaries will have access to the drugs they need most regardless of their plan’s formulary. There are certain caveats, especially if your physician insists that only a specific drug brand or combined drug compound will work for your medical needs. In some cases, you may be able to be granted an exception by your insurance carrier if a similar drug will not work for your condition.

How Much Is Medicare Part D?

Medicare Part D costs include your monthly premium and your cost share, which varies according to the drug formulary and a number of other factors listed below.

The good news is that most Medicare Part D plans in Georgia and throughout the country have a relatively low monthly premium, and they can cover the vast majority of costs for generic prescription drugs on the preferred list.

However, not being aware of your plan’s drug formulary and other cost factors can result in significant out of pocket costs, so review your plan carefully.

Medicare Part D Drug Formulary Tiers

For the most part, your prescription drug costs under Medicare Part D will vary according to the tier of drug you are selecting. 

If your drug is listed in the formulary, then you will pay a different cost share amount according to the formulary’s tier system as well as how much of the drug you will be purchasing at once, such as a 30 day supply or a 90 day supply.

The majority of Part D plans use the following tier system:

  • Tier 1: Preferred Generic: These are generic versions of the drug you seek purchased from your insurer’s preferred brand or supplier; usually the lowest copay
  • Tier 2: Generic: Generic versions of drugs not listed on Tier 1; usually a slightly higher copay than Tier 1
  • Tier 3: Preferred Brand: Brand-name versions of drugs preferred by your insurance carrier; often a significantly higher copay than Tiers 1 or 2
  • Tier 4: Non-Preferred Drug: Non-generic brand name drugs not listed on Tier 3; this tier will often charge a coinsurance amount and lead to the highest costs for beneficiaries; example coinsurance amounts include 33%, 40%, and 49%
  • Tier 5: Specialty Tier: Specific drugs that qualify for a reduced coinsurance amount compared to Tier 4; example coinsurance amounts include 25% and 40%

You will also often be required to pay different copay amounts based on whether you order your drugs through a preferred retailer, a non-preferred retailer, or via mail order. 

Medicare Part D Coverage Phases, and the “Donut Hole” Gap

As if the Medicare Part D cost wasn’t confusing enough, nearly all plans have four coverage phases that apply based on how much you have paid out of pocket for prescriptions during a benefit period and how much your plan has covered for you during that same period.

  • Phase 1: Initial Deductible: You will pay 100% of your drug costs out of pocket until your deductible is met; in 2019, the deductible for the most part D plans was $415
  • Phase 2: Initial Coverage Phase: Once your deductible is met, your Part D plan will cover the cost of drugs aside from a copay or a coinsurance cost
  • Phase 3: Coverage Gap: Once your total drug costs have exceeded a set amount for the year, you will be required to pay a higher amount of coinsurance for both generics and brand names; see more about the Medicare Part D “donut hole” below
  • Phase 4: Catastrophic Coverage Phase: Since most Medicare Part D plans have an out-of-pocket limit for the benefit period, your coverage will increase again, making your drug cost-sharing decrease

The Medicare Part D Donut Hole Is Closing

People refer to the Phase 3 coverage gap as a “donut hole” because it represents a period in between your initial coverage and when you have reached your out-of-pocket limit. You can visualize this dip in coverage as a donut held sideways, where on either side of the cover cap you have decently low cost-sharing amounts.

Many Medicare Part D beneficiaries “fall into” the donut hole unexpectedly if they have not been keeping up with their total drug costs for the year. They may suddenly find that they are paying more for the same drugs. 

The only way to “climb out” of the hole is to continue paying your cost share until you reach your out-of-pocket limit. In 2019 this limit was $5,100 for certain plans, so it can constitute a significant hurdle for individuals who rely upon a number of prescriptions.

Avoiding the donut hole requires careful reviewing of your plan and tabulation of your running total costs, which refers to the actual cost of the drugs purchased. This number can also be figured out by adding your out-of-pocket costs to the total dollar amount of coverage you have received.

Fortunately, the Medicare program has decided to phase out the donut hole issue by providing additional coverage during the Phase 3 coverage gap. 

Before the passage of the Affordable Care Act in 2009, beneficiaries would pay as much as 100% of the cost of their drugs. Now, Part D beneficiaries will pay at most 25% of the cost of Tier 3 brand name drugs as of 2019, regardless of whether they are in Phase 2 or Phase 3 of their coverage. They may pay more than 25% for Tier 1 and Tier 2 generics while they are in the donut hole, but this amount is set to phase down to 25% for Tiers 1-3 by 2020.

Medicare Part D Enrollment Periods

Enrolling in Medicare Part D is optional but available to most individuals who qualify for Original Medicare. 

The best time to apply for Medicare Part D is during your initial enrollment period. This period includes the three months before your 65th birthday, the month you turn 65, and the three months afterward. CMS recommends that you apply to a plan before your birthday in order to avoid a gap in coverage.

If you choose to not enroll in a Part D plan during this initial period, you will likely pay a penalty on top of your monthly premiums. In most cases, this penalty lasts as long as you have Part D coverage.

Should you wish to switch drug plans or enroll in a Medicare Advantage (Part C) plan that has drug coverage, you can do so without a penalty during the open enrollment period from October 15 – December 7. 

One exception is if you switch from Medicare Advantage back to Original Medicare (Part A and Part B) and wish to add drug coverage; this can be done from January 1 – March 13. 

It is worth noting again that you cannot be in a Part C plan that has prescription drug coverage if you are enrolled in a Part D drug plan.

Finding Medicare Part D Providers in Georgia

There are many different Medicare Part D providers in Georgia. Many of these plans are operated in partnership with specific retailers, allowing you to access discounts if you shop at a specific brand of pharmacy or retailer that fills prescriptions.

Medicare Part D plans in Georgia vary according to their monthly premiums, their drug formularies, and their general rules of coverage.

You can make use of a Medicare Part D plan finder tool, like the one available from the U.S. News & World Report, to compare plans’ coverage and costs in Georgia. However, the information can be a lot to digest, so it may be difficult to sort through the best Medicare Part D plans in Georgia for your specific needs.

Luckily, we’re here to help. We can locate the lowest cost plan for your current prescription needs and determine a strategy for evaluating which plan to select as your needs change in the future. We are also available to answer questions, assist with enrollment in any part of Medicare, or provide general guidance for Protecting What’s Ahead.

Do not hesitate to contact us today to discuss your options for Medicare Part D in Georgia and to obtain any related assistance you might need.

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