Medicare Part D is the federal health insurance program managed through private health insurance companies. These private health insurers provide prescription drug coverage to beneficiaries. The plans help you reduce the cost of prescription drugs that can help keep you healthy and prevent complications from diseases.
As a Medicare beneficiary, you can either sign up for a standalone Medicare Part D plan, which goes alongside Original Medicare benefits, or decide to enroll in a Medicare Advantage plan that provides prescription drug coverage.
How Medicare Part D Works
Medicare Part D plans are just like any health insurance plan that offers lower-costing prescription drug coverage. Here are the stages of the Medicare Part D drug plan:
Annual Deductible: Some Medicare Part D plans offer prescription drug coverage with an initial deductible that beneficiaries must pay out-of-pocket before their plan can start. The acceptable Part D deductible in 2020 is $435. The plans may charge members the full deductible, partial deductible, or entirely waive their deductible. Before entering the initial coverage, members will pay the network discounted fee for their medications until their plan reckons that the deductible has been satisfied.
Initial Coverage: During this phase, your Medicare Part D prescription drug plan will provide cost-sharing coverage based on your drug formulary. Cost-sharing is where the plan shares with you the retail cost of the prescription drug covered with the coinsurance or copayment. The initial coverage usually extends to the part where your medication total retail cost reaches $4,130, but some Part D plans limit the cost to about $2,000.
The Coverage Gap (Donut Hole): After reaching the initial coverage limit, the Medicare beneficiary will enter the donut hole. During this phase of the coverage, you’ll only pay 25% of all your formulary drugs. The gap spending will remain until you have reached $6,350.
Remember that to get into the coverage gap, Medicare monitors the full cost of drugs you and the private health insurance firm have spent. When it comes to getting out of the coverage gap, Medicare counts only what the beneficiary has paid in coverage gap spending, copays, and deductibles that year.
Catastrophic Coverage: When you spend more than $6,550 for medication, you’ll be covered by catastrophic coverage – here, your Medicare Part D will step in to pay 95% of the costs of the medications. When you reach this stage, you will remain in the coverage area for the remainder of the calendar year.
Need More Information?
Would you like more information about Part D prescription drug plans? Contact Turning 65 Solutions. We’ll help you analyze your prescription drug needs and help with your initial Medicare Part D enrollment.