What Is Medicare Part D?

Medicare Part D is Prescription Medication Coverage offered by Private Insurance companies. 

Medicare is a Federal Health Insurance program that provides Hospital and Medical Coverage to seniors over the age of 65 or individuals under 65 that are on disability Medicare. While Medicare offers many benefits, it does not cover Prescription Drugs or Medications that are not administered in a Hospital, Doctor’s Office or Facility. That’s why Medicare Part D is an essential aspect of Medicare coverage that you need to understand. In this guide, we’ll take a closer look at Medicare Part D and break it down into easy-to-understand terms so you can make the best decisions about your medications and healthcare.

Medicare Part D Terms

Tier Level

Medications fall under different Tier levels, depending on their costs and availability. The five-tier classification system comprises Tier 1 Generic, Tier 2 Preferred Generic, Tier 3 Preferred Brand, Tier 4 Non-Preferred Brand, and Tier 5 Specialty. Preferred generics are usually the cheapest and widely available, while specialty drugs are the most expensive and only used for rare health conditions.

Deductible

Most Medicare Part D plans feature a deductible. Typically, the deductible only applies to higher tier drugs, usually Tier 3 and above, but not generics. This means that if you’re on a brand or specialty drug, you’ll have to pay for the plan deductible before the plan begins to pay the medications cost.

CopayCoinsurance

Under Medicare Part D, you’ll be expected to pay some out-of-pocket costs such as copay or coinsurance. A copay is a fixed amount you pay, while coinsurance is a percentage of the total cost. Copays are often lower with Tier 1 or 2 Drugs and higher with Tiers 3, 4 or 5 drugs. Coinsurance percentage might increase in the coverage gap.

Coverage Gap – “The Donut Hole”

After the initial coverage phase, after you and the Medicare Part D plan have reached a certain amount in spending($5030.00), you will go into  the coverage gap, also known as the “Donut Hole.” In this phase, the plan pays a limited amount, and you are responsible for paying a higher share of the drug’s cost. Once a higher level($8000.00) is reached, the Medicare Beneficiary will reach the catastrophic phase and the  medication cost will be greatly reduced.

The 4 Stages of Coverage

Medicare Part D has distinct coverage stages that include Deductible, Initial Coverage, Coverage Gap, and Catastrophic Coverage. The Deductible phase requires you to pay out of pocket for a specific amount before your plan kicks in and shares some costs. The Initial Coverage stage follows the Deductible phase and provides coverage at a flat Copay or Coinsurance rate. During the Gap stage, you share the cost of medications will be higher with the plan until you and the insurer reach a specific combined amount. After this stage, you move to the Catastrophic phase, where you pay minimal out-of-pocket costs for the rest of the year.

Medicare Part D Covered Medications-

Injectable Medications  received in a Facility or a Hospital like Chemo, dialysis and many vaccines are covered under Medicare Part B.

Help Paying For Expensive Medications-

There are assistance programs to help lower the cost of expensive Medications. They are Income tested. They include Medicaid, which is offered by your State and some States like New York offer a program like E.P.I.C. which stands for Elderly Pharmaceutical Insurance Coverage giving seniors assistance that don’t qualify for their State Medicaid program. Also, there is L.I.S. which stands for Low Income Subsidy and is a Federal Program offered through Social Security.

Penalties-

If you do not enroll in a Part D Rx Plan when first eligible and have no creditable coverage and go more then 63 days without one then you will receive a penalty when you eventually enroll. The penalty is calculated by taking1% of the base premium ($32.74 in 2023) times the number of months you were without coverage.

Conclusion:

Understanding Medicare Part D is essential to help you make informed decisions about your medications and healthcare needs. Choosing the right plan for your needs can save you hundreds or thousands of dollars and ensure that you get the healthcare coverage that you deserve. By identifying your medication needs and researching different plan options available, you can enjoy peace of mind knowing that your prescription needs are taken care of. Reach out to your Medicare Advisor to review your Part D options.

Frequently Asked Questions 

Do I Automatically Get a Drug Plan When I enroll in Medicare?
No, you will have to enroll in a Stand Alone Prescription Drug Plan(Part D) or a Medicare Advantage Plan(Part C) with a Part D Drug Plan embedded in it.
No, monthly premiums can range from $10.00 per month up to $116.00, some deductibles as high as $545, some have deductibles that are $00.00. It all depends upon the group of medications an individual takes that determines which Drug plan would work best.
Yes, If you don’t enroll in a Part D Prescription Drug Plan when first eligible for Medicare and do not have creditable prescription drug coverage you will receive a penalty.
Yes, There are are Federal and State programs available that are income tested to assist individuals with the high cost of some Medications.
No, you will have to wait for an enrollment period or take advantage of a Special Enrollment Period(SEP) if one is available.

Mike Miligi- Owner

For over 10 years, Mike has been assisting Seniors and other Medicare-eligible individuals in understanding the ins and outs of Medicare and Medicare Health Insurance options, including Medicare Advantage Plans(Part C), Medicare Supplement Plans(Medigap), Prescription Drug Plans(PartD), and Dental and Vision programs.
Mike is Licensed in seven States and Certified with 11 Insurance Carriers. He has helped thousands of individuals decide on the best course of action for their particular Health Insurance needs. Because Mike is an Independent Medicare Health Insurance Broker, he works for the client, not the Insurance Carriers, and is able to provide his clients with accurate and unbiased Health Insurance options.
Mike recertifies with CMS(The Centers for Medicare and Medicaid Services) annually, regularly completes Continuing Education Courses required by individual State Insurance Departments, and keeps abreast of industry trends and standards to offer his clients the most up-to-date information.

Choosing the Right Medicare Coverage

Selecting the best Medicare coverage depends on factors like your healthcare needs, budget, and preferred providers. You can choose between:
  • Original Medicare (Parts A & B): Allows you to see any doctor or
    hospital that accepts Medicare but does not include prescription drug
    coverage (Part D) or additional benefits.
  • Medicare Advantage (Part C): Offers bundled coverage with
    potential extra benefits but may require using a network of providers.
  • Medigap (Medicare Supplement Insurance): Helps cover
    out-of-pocket costs not covered by Original Medicare, such as
    copayments and deductibles.

Key Medicare Enrollment Periods

It is crucial to enroll in Medicare at the right time to avoid penalties and ensure continuous coverage:
  • Initial Enrollment Period (IEP): A seven-month window starting
    three months before your 65th birthday month.
  • General Enrollment Period (GEP): From January 1 to March 31
    each year for those who missed their IEP.
  • Annual Election Period (AEP): From October 15 to December 7,
    allowing you to switch or enroll in Medicare Advantage and Part D
    plans.
  • Open Enrollment Period(OEP): From January 1 to March 31 for
    those who missed AEP and want to make certain changes.
  • Special Enrollment Period(SEP): Can be used anytime during the
    calendar year for those that meet certain criteria such as moving to a
    new service area.

Finding Help with Medicare

Understanding Medicare can be complex, but you don’t have to do it alone. Licensed Insurance Brokers, Medicare.gov, and state health assistance programs can provide guidance tailored to your specific needs.
By taking the time to explore your Medicare options, you can make informed decisions that ensure you receive the healthcare coverage that best suits your lifestyle and budget.
Do I have to sign up for Medicare?
It depends upon your current coverage. If you are employed and your employer has over 20 employees then you can delay signing up for Medicare and avoid penalties.
No, You will have to enroll in a stand alone Part D plan or a Medicare Advantage Plan(Part C) to get coverage.
There are no networks with Medicare and most doctors and hospitals accept it. However, Medicare does not cover 100% of services so a Medicare Supplement or Medicare Advantage plans is advisable.

Mike Miligi- Owner

For over 10 years, Mike has been assisting Seniors and other Medicare-eligible individuals in understanding the ins and outs of Medicare and Medicare Health Insurance options, including Medicare Advantage Plans(Part C), Medicare Supplement Plans(Medigap), Prescription Drug Plans(PartD), and Dental and Vision programs.
Mike is Licensed in seven States and Certified with 11 Insurance Carriers. He has helped thousands of individuals decide on the best course of action for their particular Health Insurance needs. Because Mike is an Independent Medicare Health Insurance Broker, he works for the client, not the Insurance Carriers, and is able to provide his clients with accurate and unbiased Health Insurance options.
Mike recertifies with CMS(The Centers for Medicare and Medicaid Services) annually, regularly completes Continuing Education Courses required by individual State Insurance Departments, and keeps abreast of industry trends and standards to offer his clients the most up-to-date information.
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