Medicare Part D

Part D (prescription drug coverage)

Medicare Parts A and B do not cover the cost of most prescription drugs. Medicare Part D is a prescription drug benefit that was introduced in 2006. Part D is optional and has a monthly premium. However, you may have to pay a late enrollment penalty if you don't enroll when you're first eligible. Part D is available through private companies, and plans must be approved by Medicare. All Part D plans have to meet certain standards set by the government, but after that, plans can vary — with different premiums, drug costs, and drugs that are covered.

You can get part D as a stand-alone drug plan in addition to Original Medicare or a Medigap plan, or you can get it as part of a Medicare Advantage plan that includes both your medical and prescription coverage. You cannot purchase a stand-alone Part D plan in addition to a Medicare Advantage plan. Doing so will disenroll you from the Medicare Advantage plan (Part C), and you'll go back to Original Medicare.

How Part D coverage works

Part D is designed with four stages. Your coverage changes from one stage to the next as your drug costs add up over the calendar year. Below is a description of the standard 2019 Part D benefit. (Your plan may have different costs.)

Part D Drug Benefits

 

1. First, you pay your plan's Part D deductible, which means you pay all your drug costs out of pocket until you reach your plan's deductible amount.

2. Next, you pay just a copay or coinsurance, set by your health plan, until your total drug costs reach $3,820 in covered drug costs. That total includes what you've paid out of pocket, as well as what your health plan has paid. Most people don't reach this amount, but if you do, you'll move into the coverage gap.

3. The coverage gap is sometimes called the "donut hole" because you have less coverage. You're in the gap until you reach $5,100 in out-of-pocket expenses. This total includes everything you've paid for covered drugs from the beginning of the year, as well as the dollar value of any discounts you receive on brand-name drugs while you're in the gap.

4. After you reach the out-of-pocket limit, you move into the last stage of coverage where you pay a low coinsurance or fixed fee for the rest of the year.

On January 1, your coverage starts over again in the deductible stage.

Medicare Part D covers:

All outpatient drugs mandated by Medicare. Coverage rules such as limitations and preauthorizations may apply.

Medicare Part D does not cover:

  • Drugs not on the Medicare formulary
  • Certain drugs that are covered under Medicare Part B

Eligibility

  • You're eligible for Part D if you have Part A and/or Part B.
  • You must live in your chosen plan's service area to enroll.
  • You can only enroll in one Part D plan at a time. ("Double coverage" is not allowed.)

When to enroll

If you don't enroll in Part D when you're first eligible for Medicare, and you decide to enroll later, you could be charged a higher monthly Part D premium. Find out how the penalty is calculated on Medicare's website

Before selecting a Medicare Part D plan, see if the prescription drugs you currently take are on the plan's formulary (list of covered drugs), and what the costs are. You can visit www.medicare.gov to compare Medicare Part D prescription drug plans.

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