Prescriptions can be expensive, and that’s stressful if you’re having trouble affording them. A health insurance plan that covers some of your medication costs can help make staying healthy a little easier. Medicare Part D can help.
How does Medicare Part D work?
Medicare Part D is an optional part of Medicare that covers most prescription medications. Part D is offered through private insurance companies that many people on Medicare choose to help offset drug costs.
Medicare has four parts: A, B, C, and D. Medicare Part A covers inpatient hospital care, skilled nursing facility care, home health care after discharge from an inpatient hospital stay, and hospice care.
Most people who are eligible for Medicare receive Part A automatically.
Medicare Part B covers outpatient doctor’s office visits, X-rays, lab tests, home health services, preventive services, durable medical equipment, mental health services, ambulance services, and physical therapy, among other services. Most people with Medicare choose to receive their Part A and Part B benefits under traditional fee-for-service Medicare, or Original Medicare.
Medicare Part C is the part of Medicare under which private health insurance plans—instead of Original Medicare—administer Part A and B benefits and also usually offer a prescription drug benefit. Part C plans are usually called Medicare Advantage Plans.
To get prescription drug coverage, Medicare beneficiaries can enroll in a stand-alone Medicare Part D Prescription Drug Plan (PDP) or in a Medicare Advantage Prescription Drug plan (MAPD). Beneficiaries may pay a monthly premium to their insurance carrier, and then medications that the insurance company covers can be purchased. A deductible and copay or coinsurance may be paid by the beneficiary, and the insurance company covers the remaining cost.
There are four stages of Medicare Part D coverage throughout the year in which the costs of drugs may change:
- Deductible: The amount of out-of-pocket costs a Medicare consumer must pay before Medicare coverage takes effect.
- Initial coverage: Medicare plans and the consumer share the cost of prescription drugs. This copay or coinsurance is set by the plan depending on the tier of each drug, and other factors.
- Coverage gap: After the consumer and the plan pay a certain combined amount on covered drugs, the consumer moves to the coverage gap, which is also called the Medicare donut hole. “In 2019, you pay either 25% or 37% for brand-name and generic drugs. However, in 2020, it will be 25% across the board,” says Danielle K. Roberts, Medicare expert and co-founder of Boomer Benefits.
- Catastrophic coverage: The final stage of Medicare Part D coverage where the consumer pays about 5% of their drug costs through the end of the year. In 2019, catastrophic coverage is reached after the consumer alone pays $5,100 in total out-of-pocket costs.
What drugs are covered by Medicare Part D?
The prescription drugs covered by Medicare Part D plans will vary based on what each individual insurance carrier covers.
A Medicare Part D plan will generally cover at least two drugs from every drug category. Plans are also required to cover almost every drug from the following classes:
- Antipsychotics: These drugs are prescribed to help manage psychosis. Examples of commonly prescribed antipsychotics include Haldol (haloperidol) and Risperdal (risperidone).
- Antidepressants: These drugs help treat depressive and anxiety disorders for many people. Effexor XR (venlafaxine) and Prozac (fluoxetine) are two commonly prescribed antidepressants.
- Anticonvulsants: This group of drugs consisting of pharmacological agents helps those who experience epileptic seizures. Examples of anticonvulsants that may be covered by a Medicare Part D plan include Keppra (levetiracetam) and Lamictal (lamotrigine).
- Immunosuppressants: These drugs reduce the strength of the body’s immune system, which is sometimes required for organ transplants or to treat autoimmune diseases. Prednisone medications, like Deltasone and Orasone, are examples of commonly prescribed immunosuppressants.
- Cancer drugs: Medicare Part D plans will cover some cancer drugs. It’s important to talk with your healthcare provider and insurance carrier to make sure the drug you need is covered before enrolling in a prescription drug benefit. Examples of commonly prescribed cancer drugs include Avastin (bevacizumab) and Revlimid (lenalidomide).
- HIV/AIDS drugs: A Medicare Part D plan will cover some prescription medications for HIV/AIDS. Some examples of these types of drugs include Truvada (emtricitabine-tenofovir), Norvir (ritonavir), and Isentress (raltegravir).
Both generic and brand-name drugs are covered by Medicare Part D, but brand-name medications may cost more for beneficiaries. Drugs are placed into tiers by Medicare Part D plans, and drugs in different tiers will have different costs. Brand-name drugs may be placed into higher tiers that have a higher copay or coinsurance costs.
One thing to know about Medicare Part D is that it doesn’t cover over-the-counter medications, prescription vitamins, and certain other medications. Talking with a healthcare provider or physician, and reviewing your plan options annually is the best way to determine if your Medicare Part D plan is the right plan for you based on your individual medical needs. You have the opportunity to switch plans to one that better suits your needs during Fall Open Enrollment. People with Medicare Advantage plans may be able to switch plans during the Medicare Advantage Open Enrollment Period.
What is the cost of Medicare Part D?
Every Part D plan gets to set its own deductible, premiums, tier levels, and formularies. The monthly premium for those with Medicare Part D will vary depending on the plan. The national monthly average for 2019 is $33.19, though there’s potential for this to change in 2020.
If the insurance company requires a deductible, that will be paid first, followed by a copay or coinsurance for every prescription medication. There are limits to how much a deductible will be; the limit for 2019 cannot be more than $415.
After a deductible is paid, Medicare Part D plans will require beneficiaries to either pay a copay or coinsurance for prescriptions. If coinsurance is required, then the beneficiary will pay a percentage of the drug being purchased.
One of the problems affecting people with Medicare is something called the coverage gap, or “donut hole.” The coverage gap is reached when total drug costs paid by the consumer and plan reach a certain limit. Once the limit is reached, a person is likely to pay higher out-of-pocket costs for their medications.
People with higher incomes may pay higher costs for their Part D coverage. Conversely, people on Medicaid or who qualify for “Extra Help” may pay significantly lower costs under Part D.
The founder of MedicareQuick, Kathe Kline, recommends gaining a full understanding of how Medicare Part D works in order to estimate potential costs.
“Each plan has its own premium costs, deductibles, copay amounts, coinsurance amounts, and formularies,” Kline says. “The formulary tells you which drugs the plan covers, and what your costs will be. Many people mistakenly look at only the premium and deductible. That’s a mistake. I recommend that people on Medicare look up their costs every year using the tool called MyMedicare.gov. That way you’ll be looking up all costs, including your medications, which can be the bulk of the expense.”
How do I get Medicare Part D?
It’s easy to look at and compare plan options on Medicare.gov if you’re interested in signing up for a Medicare prescription drug plan like Medicare Part D. Calling 1-800-Medicare and speaking to a counselor is also a good option if you need assistance.
Be sure to consider premium, copayment, coinsurance, and deductibles, and take a look at the covered medications and potential drug restrictions to make sure you select the best Medicare Part D plan for you.
Initial enrollment periods for those new to Medicare and who are turning 65 years old includes the three months before, the month of, and the three months following their birthday. The annual Fall Open Enrollment period runs from Oct. 15 to Dec. 7. If you don’t enroll within these time frames, you may pay a late enrollment penalty. It’s a good idea to check Medicare.gov to make sure you know the deadlines and to see if you qualify for a Special Enrollment Period.