Understanding Medicare Part D

Medicare Part D was introduced in 2006 as a way to help seniors defray the cost of prescription drugs. It is a voluntary insurance program that seniors eligible for Medicare sign up for and comes in the form of a pharmacy card.

Eligible seniors who elect not to sign up for it during their initial enrollment into Medicare are subject to late penalties when they sign up later. Part D has four different components. This article outlines how Medicare Part D works and how to find the right plan that meets your needs.

Components of Medicare Part D

When you sign up for Medicare Part D, the plan you choose may or may not have a deductible. Those that do often have lower premiums. The deductible is an annual one. Each time you fill a medication, what you pay for it counts toward your deductible.

Once the deductible amount is satisfied, your prescription medications are covered by the insurance. You will pay your share in the form of a copay.

The amounts of the deductible, premium, and out of pocket depend on the plan you choose, although is a basic structure to all plans that is set by Medicare each year.

Be aware that each plan has its own list of drugs, known as a formulary, that are covered under the plan. This formulary can change from to year to year, and you’ll receive a notice when this occurs. Depending on the types of medication you take, some may not be covered under a certain plan. Other plans may cover it though, so it’s good to shop your plan every year. Examine this part of the plan carefully.

After you satisfy you deductible, Medicare Part D covers up to $3750 in 2018 in drug costs during the initial coverage period each year. This includes what you spend and what the insurance company spends.

After this limit is reached, the plan enters a coverage gap or donut hole. During this period, you pay a higher percentage of the cost of your medications. You will stay in the coverage gap until you have reached a certain limit in out of pocket spending each year. The costs which count up toward that limit include:

• Discounts on drugs by the manufacturer
• Your co-pay and co-insurance amounts paid during normal coverage
• The same amounts while paid in the gap
• The annual deductible paid by you

If the limit is reached, catastrophic coverage sets in. The catastrophic limit is set for $5000 in 2018. Once you reach this level, the insurance company must pay 95% of your covered drug costs for the rest of the year. The term catastrophic coverage means a point at which the plan must cover more to protect you from catastrophic drug spending on your part that might cause you medical bankruptcy.

Talking with your physician and asking whether any of your medicines come in an effective but less expensive generic form is one way to keep from hitting the coverage gap and to keep your drug costs as low as possible throughout the year.

Finding the Right Medicare Part D Plan

Understanding Medicare Part D before deciding on a plan helps in finding the right fit. The Medicare.gov website is a great place to start. They have a plan finder designed to help you find a good plan that covers the medications you need.

Like with other types of insurance plans, the details matter. The costs of co-pays, co-insurance deductibles, and expenses vary from plan to plan. Evaluating the pharmacy you are currently using and comparing it to others in your area is also helpful. Comparing pharmacies against different plans helps in determining your costs

Medicare also rates plans using star ratings. Their ratings do factor into things like customer service, problems with service, experiences that people have with the plan, and drug pricing. This is another way to weed out plans that aren’t a good fit.

Check your medications on the plan finder tool to see if there are any restrictions on the various plans since this also impacts overall costs

Learning how Medicare Part D works isn’t always easy given how many moving parts there are. While research and due diligence help in the process, professional help is available. Our team of Medicare experts will assist you in navigating Medicare Part D and finding the plan that suits your needs.