How Are Prescription Drugs Covered With Medicare

Original Medicare does not cover prescription drugs. However, Part D Prescription Drug Plans are available to fill this coverage gap. Medicare Advantage Plans are an alternative to Original Medicare that offers prescription drug coverage in most cases.

Medicare Part D

A Medicare Prescription Drug Plan adds drug coverage to Original Medicare. To join a drug plan, you can enroll on the Medicare Plan Finder, complete a paper enrollment form, call the plan or call 1-800-MEDICARE.

Medicare sets a standard level of coverage for prescription drug plans, which vary in the prescription drugs they cover and in costs. Part D plans have their own list of which drugs are covered, which is called a formulary. The plans include brand-name and generic prescription drugs and cover at least two drugs for each of the most commonly prescribed categories and classes.

If your specific prescription drug is not on your plan’s formulary, a similar drug should be available. You and your prescriber can request an exception if none of the drugs on the formulary will work for your condition. An exception can also be requested if you need a higher quantity than is generally available. Drug plan coverage rules place quantity limits for safety and cost reasons.

Plans place their covered drugs into tiers on their formularies. Tiers are divided by cost and differ for each plan. Commonly, the lowest tier is for generic prescription drugs and requires the lowest copayment. Preferred brand-name drugs follow in the next tier with a higher copayment. Non-preferred brand-name drugs are in a higher tier with a higher copayment. Specialty, high-cost prescription drugs are in the highest tier and require the highest copayment.

Drug coverage may change throughout the year if your plan follows guidelines set by Medicare. The formulary may change if new drugs or new medical information become available. Drugs deemed unsafe by the Food and Drug Administration will be immediately removed. Brand-name drugs may be removed in favor of generic drugs. You will be given 30 days advance notice of any changes to a drug you are taking or given a month’s supply at the previous rate when you request a refill. 

If you decide not to sign up for Part D when you are first eligible, you will likely pay a late enrollment penalty. This gets added to your monthly premiums and generally lasts for as long as you have Medicare prescription drug coverage. You will not have a fee if you get Extra Help from Medicare or have other creditable prescription drug coverage. 

Extra Help is for people with limited income and resources. It helps to cover the costs of Part D like premiums, deductibles, and coinsurance. If you have Medicaid, receive a Supplemental Security Income, or are awarded Extra Help by Social Security, you can benefit from this program.

Medicare Advantage Plans

If you want a combined plan, Medicare Advantage Plans cover your Part A (hospital insurance) and Part B (medical insurance) coverage and prescription drug coverage. To join a Medicare Advantage Plan, you must first be enrolled in Part A and Part B.

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