Part D Prescription Drug Plans - True Help Medicare

Click HERE for the Official Government Booklet on Prescription Drug Plans from CMS

** IMPORTANT ** You may very well qualify for “Extra Help” to help pay for prescription drug costs. Click HERE for information on how you qualify.

** IMPORTANT ** While Part D Prescription Drug plans are technically “optional” to purchase with Original Medicare or with a Medicare Advantage plan, if you don’t get a drug plan when you are first eligible for Medicare, and you try to get a drug plan in the future, you could be charged a Part D Late Enrollment penalty for not having drug coverage since you first became eligible. The only way to avoid the late penalty is if you have “creditable drug coverage” from another source. Examples of other creditable drug coverage include Retiree insurance, Union plan, Veterans Affairs (VA), TRICARE, Indian Health Service (IHS)

Part D Prescription Drug plans are administered by private insurance companies, NOT the government.
No medical underwriting is required for a Part D Prescription drug plan, you just need to live in the plan’s service area.
Part D drug plans are “one-year” plans from January 1st thru December 31st. The plan can NOT be changed until the next fall AEP (Annual Election Period, with an effective date of January 1st), unless you get an SEP (Special Election Period).

Average monthly premium for a Stand-Alone Prescription Drug Plan (aka PDP) is approximately $33.00/mo. You would purchase a PDP plan when you have Original Medicare with a Medicare Supplement (Medigap). You would NOT purchase a PDP when you have a Medicare Advantage plan as MOST Medicare Advantage plans already include prescription drug coverage.

Even if you’re healthy and don’t take any medications when you’re first eligible for Medicare, you should at least buy the cheapest (approximately $7/mo.) Part D prescription drug plan, which will help you avoid a Part D Late Enrollment Penalty when you actually do need prescription medications in the future. *NOTE: The only exception to NOT having a Part D Prescription drug plan when you are eligible for Medicare is if you have “creditable drug coverage” from another source, perhaps an employer group policy. Make sure to check with the insurance plan to confirm the coverage is “Medicare creditable” or you may face a lifetime Part D Late Enrollment penalty.

Medicare Supplements (Medigap) plans do NOT include drug coverage.

Most Medicare Advantage plans DO include prescription drug coverage (MAPD plans).

You can get a Stand-Alone Part D Drug plan (as long as you DON’T have a Medicare Advantage plan).
On a Stand-Alone drug plan (PDP) there is a Part D monthly premium that varies by the plan provider. On a Medicare Advantage plan, the cost associated with drug coverage is usually included in the plan premium, even if its a ZERO monthly premium Medicare Advantage plan. The Medicare plans that include drug coverage are known as MAPD plans.

On a Medicare Advantage Prescription Drug plan (MAPD), while there may not be a separate premium for the drug coverage, there ARE prescription copays, coinsurance and deductibles associated with the prescription drug coverage of the MAPD plan each year.

Drug Formulary is simply a list of covered drugs included in the plan. It is important to check the plan’s Formulary first to be sure your specific medications are included in the drug plan. You need to check the formulary rather it is a Stand-Alone Part D drug plan or a Medicare Advantage Prescription Drug plan (MAPD).

Yearly Deductible This is the amount you must pay each year for your prescriptions before your Medicare drug plan pays its share. Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible more than $505 in 2023. Some Medicare drug plans don’t have a deductible.

Drug Tiers – Most drug plans place drugs into different levels called “tiers” on their formularies. Drugs in each tier have a different cost. For example, a drug in a lower tier will generally cost you less than a drug in a higher tier. Part D drug plans can have different tier levels. Below is a common example of a 5 tier plan:

Tier 1: Preferred generic drugs

Tier 2: Non-preferred generic drugs

Tier 3: Preferred brand-name drugs
Tier 4: Non-preferred brand-name
Tier 5: Specialty drugs

*NOTE: Many Part D drug plans don’t require a deductible for drugs listed on lower tiers like 1 & 2. Also, one drug plan may categorize a drug on tier 3 while another drug plan may categorize the exact same drug as tier 2, that’s why it is important to shop your Part D prescription drug plans.

* Click HERE to see a typical example of a Part D Prescription Drug plan.

Part D drug plan providers can make changes to the drug plan for the following year. They can change the medications listed on the Formulary, they can change the drug tiers, i.e. a drug that used to be on tier 2 could change to tier 3 and more. It is important to read the Annual Notice of Change (ANOC). All plan providers are required to send the ANOC to plan members by September 30th each year, so members can change drug plans during the upcoming fall Annual Election Period (AEP). *NOTE: Annual Election Period is the ONLY time you can change your prescription drug plan unless you are granted a “Special Election Period” (SEP).

IRMAA (Income-Related Monthly Adjustment Amount) – For 2023 (looking back at your 2021 taxes), if you earned more than $92,000 filing single or more than $194,000 filing jointly, Medicare will charge you an “additional” Part D monthly surcharge (See IRMAA chart) on top of what you will pay your plan for drug plan premium.

If you don’t purchase a Stand-alone Part D drug plan (or have drug coverage included in your Medicare Advantage plan), when you are first eligible for Medicare, you may be subject to a “Part D Late Enrollment Penalty“. Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” (about $33.06/mo.) times the number of full, uncovered months you didn’t have Part D prescription drug plan or creditable drug coverage.

Part D drug plans always start the 1st of the month after you enroll. If you had “creditable coverage” from your employer that you will be losing, make sure you have a new plan in place (effective date) within 63 days of losing your creditable coverage, otherwise, you may be charged a Part D Late Enrollment Penalty.

If you don’t have an SEP (Special Enrollment Period) option, you will have to wait until FALL AEP (Annual Enrollment Period – October 15th thru December 7th), with a coverage effective date of January 1st of the following year. Example: Your Initial Enrollment Period (IEP) deadline was January 31st, and you missed the deadline. You would have 11 months without creditable drug coverage (February thru December) from the time you became Medicare eligible, which means you would have an 11% Late Enrollment Part D Penalty charged to you for the rest of your life. Click HERE for more information on Part D Late Enrollment Penalty.

The Four Stages of a Part D Prescription Drug Plan

Stage 1 – Deductible: Until you meet your Part D plan deductible, you will pay the full negotiated price for your prescription drugs. Once you have met the plan’s deductible, you move into Stage 2 – Initial Coverage and the plan will begin to cover the cost of your drugs. Part D deductibles can vary from plan to plan, however, no plan’s deductible can be higher than $480 (in 2022), and some plans have no deductible at all.

Stage 2 – Initial Coverage: (Copays) After you meet your plan’s deductible, the plan will help pay for your covered prescription drugs. In this stage, you will pay a copay and your plan will pay the rest. How long you stay in the Initial Coverage period depends on your drug costs and your plan’s benefit structure. For most plans in 2023, the Initial Coverage stage ends after you have accumulated $4,660 in total drug costs, then you move to Stage 3 – the Coverage Gap. *NOTE: Total drug costs include both the amount you AND your plan have paid for your covered drugs.

Stage 3 – Coverage Gap: (aka Donut Hole). After your total drug costs during Stage 2 reach $4,600 (in 2023), you enter the Coverage Gap. While in the Coverage Gap, you will be responsible for 25% of the cost of your drugs. You stay in Stage 3 until the amount of your year-to-date “out-of-pocket drug costs” reaches $7,400 (in 2023), then you will move to Stage 4 – Catastrophic Coverage.

Stage 4 – Catastrophic: You enter Catastrophic Coverage after you reach $7,400 (in 2023) in out-of-pocket costs for covered drugs year-to-date. This amount is made up of what you pay for covered drugs and some costs that others pay. During this period, you pay significantly LOWER copays or coinsurance for your covered drugs for the remainder of the year. The out-of-pocket costs that help you reach Catastrophic Coverage include: Your deductible, What you paid during the Initial Coverage stage, Almost the full cost of brand-name drugs (including manufacturer’s discount) purchased during the Coverage Gap, Amounts paid by others, including family members and most charities.

Costs that do NOT help you reach the Catastrophic stage include: Monthly Part D premiums, What your plan pays toward drug costs, Cost of non-covered drugs, Cost of covered drugs from pharmacies “outside” your plan’s network, and the 75% generic discount during the Coverage Gap stage. During Catastrophic Coverage stage, you will only pay 5% of the cost for each of your drugs, or $4.15 for generics and $10.35 for brand-name drugs, whichever is greater (in 2023). *Note- in 2024, the cost during the Catastrophic stage will change from 5% to $0 for the remaining calendar year.

Your Part D Prescription drug plan should keep track of how much money you have spent out-of-pocket for covered drugs and your progression through coverage periods.

Under some circumstances, your Part D drug plan can change the cost of your drugs during the plan year. However, the plan is required to alert you if changes are made. Your plan cannot change your deductible or premium during the plan year.

For more information on Medicare Part D Prescription Drug Plans, please click photo icon below

Part D “Extra Help“

Medicare may be able to help you pay for your medications. People whose yearly income and resources are below certain limits can qualify for this help. To see if you qualify for getting “Extra Help”, call:

800-MEDICARE (800-633-4227). TTY users, please call 877-486-2048. 24 hours a day, 7 days a week. You can also refer to medicare.gov or refer to “Programs for People with Limited Income and Resources” in your Medicare and You Handbook.
The Social Security Office at 800-772-1213 between 7:00 a.m. and 7:00 p.m., Monday through Friday. TTY users, please call 800-325-0778.

Click HERE for more information about Extra Help

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