Anyone who is eligible for Original Medicare benefits is also eligible for prescription drug coverage plans, or Medicare Part D. Medicare Prescription Drug Plans (PDPs) and Medicare Advantage plans with prescription drug coverage provide beneficiaries with coverage that helps them pay for brand-name and generic drugs. More than 43 million Americans are enrolled in Part D. If you are enrolling in Medicare soon, or already have Original Medicare and are thinking about adding prescription drug coverage, you may be wondering if all Part D plans are the same.
Are all Medicare prescription drug plans alike?
Medicare prescription drug plans are sold by private insurance companies in the United States. While U.S. federal law requires that all insurance companies that offer these prescription drug plans provide at least the standard level of coverage as it is defined by Medicare, they have the option to offer different combinations of coverage and cost sharing.
You can enroll in Part D as a stand-alone plan in addition to your Original Medicare benefits, or you may enroll in a Medicare Advantage policy that includes prescription drug coverage as an additional option. There are also other Medicare health plans that include prescription drug benefits like PACE (programs of All-Inclusive Care for the Elderly) and Medicare Cost Plans.
Because prescription drug plans are provided by private health insurance companies, they each differ in what prescription drugs they cover, the amount you pay as a copayment or coinsurance, and what network of pharmacies you can use.
How should you select a Prescription Drug Plan?
Every private health insurance company offering prescription drug plans has its own list of covered drugs, called a formulary. On the formulary, the covered drugs are further separated into tiers. Drugs categorized on tier one are mainly generic drugs which carry the lowest copayment. Drugs on tier two are brand-name drugs which are preferred drugs and have a mid-level copayment. Drugs that are non-preferred, brand-name drugs have a higher copayment and are on tier three. Your out-of-pocket cost for your drug depends on how much your plan charges for the copayment or coinsurance according to the drug’s tier. You should also calculate the monthly premium, and the deductible, if there is one.
To find a plan that makes the most sense for your medical and financial needs, you should first check each provider in your area to find out if your drugs are included on their formulary. If your medications are included, check which tier they are on, what your copayments would be, and which pharmacies are in the plan’s network. You can compare the plans to determine which provider offers the right prescription drug plan for you.