Medicare Part D is Medicare’s prescription drug coverage program. Unlike Original Medicare Parts A and B, Part D plans are optional and sold by private insurance companies that contract with the federal government. Part D was enacted in 2003 as part of the Medicare Modernization Act and became operational on January 1, 2006. Individuals who enroll in Part D drug coverage must also be enrolled in the original Medicare Part A and Part B.
Why is Part D Important
The cost of prescription drugs has risen at a pace that threatens affordability to the most vulnerable population, seniors and individuals who are disabled and on a limited income. When Part D was first introduced, there was a gap in prescription drug coverage commonly referred to as the ‘donut hole’ where enrollees had to pay the all or part of the cost of prescriptions after the Part D coverage reached its maximum payouts. Beginning in 2020, the spending gap is reduced to a ‘standard’ co-payment of 25%, the same as required in initial spending policies. Even with the wide range of co-payments and deductibles, Medicare Part D drug coverage has proven beneficial for policy enrollees who otherwise could not afford their life-saving medications.
Does Medicare Part D Work with Other Insurance?
If someone has Medicare Part D and another insurance policy with drug coverage, there will be a coordination of benefits between the separate policy companies to determine which policy is the primary payer and which is the secondary. The determination of payments for prescription drugs will be based on the enrollee’s personal situation. This means if someone is still working, retired, or listed as a member of a family policy.
There are dozens of variables in the available Medicare Part D plans, private drug coverage plans, employer- provided plans for those still working and those retired, and union plans for those still working and those retired. Medicare Part D enrollees can benefit from a consultation with a prescription drug plan provider that is Medicare-approved to service the area where the enrollee lives. Another important consideration when selecting a Part D plan for an individual is whether the plan covers the type of medications that the potential enrollee needs. The following information outlines the major situations when Medicare Part D is the primary payer and when other insurance is the primary payer.
When Medicare Part D is the Primary Payer:
• When someone is retired and enrolled in Part D while also having another health insurance policy with drug coverage, Medicare is the primary payer. The other insurance policy is the secondary payer on any remaining amount due up to the limits of the policy. If there is still any remaining unpaid amount, the individual is responsible for the balance.
• When someone is retired and enrolled in Part D while also having drug coverage with retirement health plans through the former employer, the spouse’s former employer, or a union group health plan, Medicare is the primary payer. The other insurance policy is the secondary payer on any remaining amount due up to the limits of the policy. If there is still any remaining unpaid amount, the individual is responsible for the balance.
• When individuals have drug coverage under a State Pharmaceutical Assistance Program or have Tricare for Life and Medicare Part D, Medicare is the primary payer and the other plans are secondary payers.
• When someone has Part D and is still working for a company with 20 or fewer employees, Medicare is the primary player and the employer’s group health plan becomes the secondary payer.
When Other Insurance is the Primary Payer:
• When someone with Part D is still working for a company with more than 20 employees and has employer or union group health insurance, the employer or union group health insurance is the primary payer and Medicare Part D is the secondary payer.
• When someone with Part D is retired and listed as a family member on a working spouse’s health plan, the spouse’s health plan is the primary payer until the spouse retires and Medicare is the secondary payer.