What is Medicare (Part D)
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What is Medicare Part D and how does it work?
Medicare part D is a federal program offered through private insurance carriers to provide drug coverage to consumers on Medicare.
2 ways to get drug coverage:
- Medicare Prescription Drug Plan (Part D): These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
- Medicare Advantage Plan (Part C): (like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance)and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.
What Drug Plans Cover:
How does a Medicare Part D plan work?
Medicare part D is considered by many the most confusing part of Medicare. Since most people take a few prescriptions and we generally take prescriptions on a daily basis it is important to understand how it works.
Medicare sets a standard model for the insurance carriers to follow and that is why most plans look very similar. In the first phase most part D plans have a deductible phase. If you do not know what a deductible is? Basically it is the dollar amount set by the insurance company that you must pay before they start to pay. With most part D plans you will find that they cover drugs on tiers. Each tier represents a different cost sharing, so depending on which tier your drug falls on will decide how much each drug costs you. Typically plans have 4-5 tiers and the higher the tier the more expensive the drug. The majority of plans have some kind of drug deductible however the deductible will normally apply only to drugs labeled tier 3 or higher. Tier 1 and tier 2 drugs are generally common generic drugs and you should be able to get them without paying any deductible. Once you have met your plans deductible amount you will have copays or coinsurance to pay for all of your covered prescriptions.
This is considered the initial coverage phase; this is when your plan starts sharing prescription costs with you either in the form of a copayment or coinsurance. Usually the coverage phase extends to a point where retail cost of medication reaches 4,340.00 Once you meet this amount you start the next phase of coverage known as the coverage gap aka the Donut Hole.
During this phase you will receive a 75% discount on all covered drugs. This can be very expensive particularly for tier 3-5 drugs . This phase lasts until an individual has paid 7,050 at this point you enter the final stage of coverage. (There are some plans that cover generic drugs during the coverage gap)
This phase is called catastrophic coverage phase and in this phase prescription cost comes down to around 5% of the retail cost. This phase lasts until the end of the calendar year.
Fortunately most people on Medicare never leave phase two, for those that do it can be quite expensive.
If you want to stay out of the coverage gap it is always a good idea to speak with your doctors about taking generic options when possible. Many drug manufacturers also offer prescription assistance for many of their expensive drugs and there are a few states that have off state pharmaceutical assistance programs that can help with costs.