Prescription Drug Coverage – Insurance Made Easy

Medicare Prescription Drug Plan Coverage

Enrolling in Medicare benefits provides the security of knowing that hospital stays and doctor visits are covered. However, if you've simply enrolled in the required components of Medicare — Part A for hospital insurance and Part B for medical coverage — you'll need to enroll in a second plan to help cover a big health care expense for older adults: prescription medicines. This is where Medicare's fourth component, the Part D plan, comes in.

What is Medicare Part D Plan?

In its most basic form, Medicare Part D is prescription drug coverage. Part D is an optional component of Medicare that helps cover the cost of prescription medications while reducing other medication costs.

The government funded program is managed by private insurance firms, which charge you a monthly payment as well as a part of the cost of your drugs. In exchange, the insurance company pays the remaining cost of your drug.

Part D coverage was introduced in 2006 to assist Medicare beneficiaries with their retail prescription expenditures. Insurers rely on a network of pharmacies to supply these prescriptions, allowing individuals to receive them at a lesser cost.

What Does Medicare Plan D Cover?

Prescription and generic drugs
Vaccines
Medications given in outpatient settings
Medication Therapy Management services if you satisfy certain criteria or are a part of a group that assists people in using opioids safely!

How Do I Get Medicare Coverage?

Medicare beneficiaries can obtain Medicare prescription medication coverage in one of two ways:

Medicare drug plans: These are private plans available in addition to Original Medicare, Medicare Cost Plans, select Private Fee-for-Service plans, and Medical Savings Account Plans. Medicare recipients can enroll in one of these standalone Part D plans as long as they have Medicare Part A and Part B.
Medicare Advantage plans (Part C): These private, bundled plans, which include Medicare Parts A and B, typically include Part D prescription coverage as well.

What are the eligibility requirements for Medicare prescription medication coverage, you may be wondering?

To enroll in a Medicare drug plan, you must have Medicare Part A (hospital insurance) and/or Medicare Part B (medical insurance). You must also be a US citizen or be lawfully present in the US.

Breakdown of Part D costs

In terms of expense, Medicare prescription medication plans progress through four stages during the year.

What are the Four Stages of a Medicare Part D Plan?

Stage 1, Annual Deductible: You pay full price for your prescriptions until your expenditure totals the amount of your deductible.
Stage 2, Initial Coverage: After you’ve covered your deductible, your plan will pay for a portion of each covered prescription drug you purchase.
Stage 3, Coverage Gap: After you and your plan have spent a total of $4,430 on approved pharmaceuticals, you will enter a coverage gap in which you will be responsible for up to 25% of the plan's cost for covered generic drugs.
Stage 4: Catastrophic Coverage: When your total out-of-pocket cost surpasses $7,050, you exit the coverage gap and begin receiving catastrophic coverage, under which Medicare and your insurer cover around 95% of the cost of eligible prescription medications.

What is the Average Cost of a Medicare Part D Plan?

There are a few common charges associated with Medicare Part D coverage:

Monthly premiums: The average monthly cost of Medicare Part D premiums varies by plan and region, but according to the Kaiser Family Foundation, the average cost of a standalone prescription drug plan with enhanced benefits was around $44 per month in 2021, and the average cost of a basic benefit prescription drug plan was around $32 per month.
Annual deductibles: This is the amount you must pay each year before your Medicare drug coverage kicks in. Deductibles vary per plan — and some don't charge one at all — but federal regulations state that no Medicare prescription plan can charge more than $480 in 2022.
Copayments and coinsurance: After you've met your deductible, you'll be required to pay these amounts as your half of the prescription cost. Coinsurance is a proportion of the prescription cost, whereas copayments are a flat amount charged by your insurer for specific prescriptions.

Are Medicare Part D Premiums Based on Income?

A higher income may result in increased monthly Medicare medication coverage premiums, regardless of whether you have Original Medicare or a Medicare Advantage Plan.

So, what is the income threshold for Medicare Part D?

Individuals earning more than $87,000 and couples earning more than $174,000 must pay an additional sum known as Part D IRMAA (Income-related Monthly Adjustment Amounts) in addition to their plan premium.

In 2022, the extra sum each month ranges from $12.50 to $77.90. If you are required to pay this amount, Social Security will notify you.

It's vital to note that this additional amount isn't included in your plan premium, which means you'll receive a charge from Medicare if you don't have it withdrawn automatically from your Social Security check. You may lose your prescription drug coverage if you do not pay this amount.

How Much Does Medicare Part D Pay for Prescriptions?

The amount Medicare pays for medicines is determined by the drug coverage plan you select. If you have a deductible plan, your prescriptions will not be covered until you have paid your deductible in full.

Some plans require a prescription copayment, such as $5 for a generic medicine and $25 for a preferred brand-name drug.

Plans may also utilize a coinsurance, or cost-sharing, model, in which you pay a percentage of the drug's cost and your insurance covers the remainder.

Certain plans may impose a set copayment for some medicines while requiring coinsurance for others, such as more expensive drugs.

What Happens if you Don’t Sign Up for Medicare Part D?

You are not obligated to enroll in Medicare prescription drug coverage. However, if you go too long without drug coverage, it may cost you later if you change your mind.

If you do not have Medicare drug coverage when you first become eligible, you may be able to rely on other acceptable prescription medication coverage, such as that provided by your company or union.

The penalty amount is determined by how long you were without Part D or creditable prescription medication coverage.

Outside of the first enrollment period, you may avoid fines by enrolling during a special enrollment period, if certain conditions are met. For example, if you leave your employer's medication plan, you can enroll in Medicare Part D within two months of the termination of your employer's coverage.