Medicare, the federal program, helps cover health care costs for people over 65 (and under 65 with certain disabilities), and is divided into four parts:
- Part A: Covers hospital and inpatient services
- Part B: Covers doctor visits and other outpatient services. Together, Parts A and B are referred to as “Original Medicare.“
- Part C: Also known as “Medicare Advantage,” makes Medicare-covered services available through private health plans, such as HMOs, PPOs, and private fee-for-service plans (PFFSs).
- Part D: Prescription drug coverage is offered by private companies through stand-alone plans (for members who have “Original Medicare.“) and through HMOs, PPOs, and PFFSs (for beneficiaries who have “Medicare Advantage,“). Anyone who has Original Medicare or Medicare Advantage is eligible to enroll in Part D. Enrollment in Part D is voluntary.
What is Medicare Part D Prescription Drug Coverage?
Private companies that offer Part D coverage are allowed to design their own benefit plans, as long as the overall value of the plan is at least as good as the basic plan outlined in the 2003 Medicare Act. So, different plans offer different lists of medicines (called a formulary), and different costs. Beneficiaries should compare the different drug plans available in their area to find the one that best suits their needs.
What’s the Basic Part D Plan?
The basic Part D plan generally meets the following criteria:
- The annual deductible can’t be more than $405 (in 2018)
- The plan must cover at least two drugs in each drug class. The plan must cover substantially all drugs in these six categories: antidepressants, antipsychotics, anticonvulsants, antiretroviral (AIDS treatments), anticancer drugs, and immunosuppressants
- Members must be able to seek an exception if a drug is medically necessary but not covered under the plan
- Plans must have a network of pharmacies that provide convenient access
- Lists of covered drugs and pharmacy networks must be readily available to members
- Plans must work with nursing homes
- Plans must help transition a member’s current drug coverage
- Plans must offer catastrophic coverage that is at least as good as the coverage outlined in the 2003 Medicare Act
What is not covered by Part D?
Some drugs are generally not covered by Medicare Part D, including:
- Over-the-counter drugs
- Most prescription vitamins and minerals
- Certain anti-anxiety and anti-seizure drugs
- Fertility drugs
- Drugs for weight loss or gain, and anorexia
- Cosmetic and hair growth drugs
- Drugs that treat symptoms of the common cold (e.g., coughs, congestion)
- Drugs covered under Part A or Part B
How much does Part D cost?
How much you’ll pay for Medicare drug coverage depends on which plan you choose. But in general, here’s what you can expect to pay in 2018:
- Monthly premium: Most plans charge a monthly premium. Premiums vary, but the Part D national average monthly bid amount for 2018 is $57.93 and the 2018 Part D base beneficiary premium is $35.02 (Source: Centers for Medicare & Medicaid Services Annual Release of Part D National Average Bid Amount). This is in addition to the premium you pay for Medicare Part B. You can have the premium deducted from your Social Security check, or you can pay your Medicare drug plan company directly. Note that beneficiaries with high incomes will be required to pay a higher Part D premium than other beneficiaries.
- Annual deductible: Most plans require you to satisfy an annual deductible of up to $405 in 2018.
- Copayments: Once you’ve satisfied the annual deductible, if any, you’ll need to pay 25 percent of the next $3,300 of your prescription costs (i.e., up to $825 out-of-pocket) and your Medicare drug plan will pay 75 percent (i.e., up to $2,475). After that, there’s a coverage gap; you’ll need to pay 100 percent of your prescription costs until you’ve spent an additional $3,725 (some plans offer coverage for this gap). However, once your prescription costs total $7,425 (i.e., your out-of-pocket costs equal $4,950–you’ve paid a $400 deductible + $825 + $3,725 in drug costs, and your Medicare drug plan has paid $2,475), your Medicare drug plan will generally cover 95 percent of any further prescription costs. For the rest of the year, you’ll pay either a coinsurance amount (e.g., five percent of the prescription cost) or a small copayment for each prescription, whichever is greater.
Costs and limits may change each year, and not all plans will work exactly this way.
Health-care legislation passed in 2010 gradually closes the prescription drug coverage gap, also called the “donut hole.” In 2017, if you have spending in the coverage gap, you’ll receive a 60 percent discount on covered brand-name drugs, and a 49 percent discount on covered generic drugs. Other changes will take effect in future years.
Extra help with Medicare drug plan costs is available to people who have limited income and resources. Medicare will pay all or most of the drug plan costs of those who qualify for help.
Enrolling in Part D
Medicare prescription drug coverage is available in two ways:
- You can join or remain in a Medicare Advantage plan that provides all your Medicare benefits, including Part D benefits
- You can enroll in a stand-alone plan, which will cover only Part D while you continue to get your other services through Original Medicare
If you are in an HMO or PPO, you must receive drug coverage through that plan.
If you are currently enrolled in Medicare, you can enroll in Part D (or make changes to your Part D coverage) from October 15th through December 7th of each year (the Annual Election Period, also called the Annual Enrollment Period, or AEP). If you’re new to Medicare, you have seven months to enroll in a drug plan (three months before, the month of, and three months after, becoming eligible for Medicare). If you qualify for Extra Help, you can enroll in a drug plan at any time during the year.
If the initial enrollment period is missed, you will be able to enroll (or dis-enroll, or change drug plans) during the Annual Election Period. However, a premium penalty will generally apply unless the reason you didn’t join sooner was because you already had creditable prescription drug coverage that was at least as good as the coverage available through Medicare.
You will be unable to enroll, dis-enroll, or change drug plans during the Medicare Annual Enrollment Period (AEP), which is October 15 through December 7.
You can join or change plans during a Special Enrollment Period (SEP) in certain situations, including (but not limited to):
- Moving out of your plan’s service area
- Losing drug coverage provided by a non-employer through no fault of your own
- Losing employer-provided drug coverage for any reason
- Losing full Medicaid coverage
- Entering, residing in, or leaving a long-term care facility
Medicare.org makes enrolling in Medicare Part D coverage simpler. Our licensed sales agents can answer any questions you have about the process. Contact us at (888) 815-3313 — TTY 711 to learn more today.