Medicare Part A and Part B don’t cover most prescription drugs, and buying medication on your own can be very expensive. That’s where Medicare Part D comes in. Let’s see how a standalone Part D plan can help you manage your prescription drug costs.
What is Medicare Part D?
Medicare Part D consists of Medicare-approved drug plans that you can buy from private insurance companies.
Part D plans vary by what they charge in premiums, deductibles, copayments and coinsurance. They also differ in which brand-name and generic drugs they cover. This list of medications is called a formulary.
If you have Original Medicare (Part A and Part B), you can buy prescription drug coverage from a standalone Part D plan. If you have Medicare Advantage (Part C), usually you won’t be allowed to join a Part D plan because Medicare Advantage already covers your prescription drugs. In fact, if you join a Part D plan, you’ll lose your Medicare Advantage plan and revert to Original Medicare.
You can only join a Part D plan without losing Medicare Advantage when you have one of the following:
- Private fee-for-service plan
- Medical Savings Account plan
- Cost plan
- Certain employer-sponsored Medicare health plans
What drugs are covered by Medicare Part D?
Part D covers most outpatient drugs. Each plan has a formulary or list of drugs it covers. Per Medicare rules, each formulary must include at least two drugs in the most commonly prescribed categories and classes. Individual plans decide which drugs to include, and your plan can change its formulary at any time, which may affect the cost of your medications.
Tiers
Part D plans arrange their formularies by tiers. Drugs in lower tiers generally cost less than those in higher tiers. If you use a drug in a higher tier and your prescriber thinks you need that drug rather than a similar one in a lower tier, the prescriber can ask the plan to have you pay less.
Vaccines
Part D plans must cover all commercially available vaccines when medically necessary to prevent disease, except for vaccines covered by Part B.
Mandatory coverage
Part D plans must cover all available drugs in the following categories:
- HIV/AIDS drugs
- Antidepressants
- Antipsychotics
- Anticonvulsants
- Immunosuppressant drugs
- Anticancer drugs (unless covered by Part B)
What drugs aren’t covered?
Medicare Part D doesn’t cover the following types of drugs:
- Over-the-counter medications
- Erectile disfunction
- Anorexia/anti-obesity
- Fertility
- Cosmetic
- Cough and cold
- Vitamins and minerals
Also, some medications aren’t covered by Part D because they’re under Part B, such as infusion cancer drugs.
What does Part D cost?
Premiums
Most Part D plans have a monthly premium. The amount varies by plan and can be deducted from your Social Security payment.
If you make more than $91,000 (separate) or $182,000 (joint) in a year, you’ll have to pay more than your plan’s standard premium. The extra monthly fees are assessed by income brackets and range from $12.40 to $77.90.
Enrolling late in Part D coverage also can raise your premium.
Deductible
Some plans make you meet a deductible before they start to pay for your medication. Other plans don’t. The deductible amount can vary from plan to plan, but the most you’ll have to pay in 2022 is $480.
Copayment/Coinsurance
The copayment or coinsurance is what you pay out-of-pocket after the plan has paid its share of your prescription. A copayment is a set amount, like $20 per prescription. Coinsurance is a percentage, such as 20 percent of the prescription cost.
What you pay in copayments or coinsurance often depends on the drug’s tier; the higher the tier, the higher your cost.
If a drug maker raises its price for a medication, a plan can pass the expense to you by raising your copayment or coinsurance. A plan also can make you pay more when you keep taking a brand-name drug after a generic form has become available.
Once you and your plan spend $4,430 combined on drugs, including deductible, you’ll pay no more than 25 percent of medication costs until your out-of-pocket spending hits $7,050.
Coverage gap
Part D plans have what is sometimes called a coverage gap or “donut hole.” As explained above, this happens when you and your plan spend $4,430 on medications in a year. After passing that threshold, you’ll pay no more than 25 percent of the cost of drugs until you reach the threshold for catastrophic coverage, which is $7,050 in 2022.
Catastrophic Coverage
After spending $7,050 out-of-pocket on drugs, you’ve crossed the gap and qualify for catastrophic coverage. You’ll pay either 5 percent of total drug costs or $3.95 for generic drugs and $9.85 for brand-name drugs for the rest of the year.
Extra Help
Extra Help is a Medicare program that can help you pay for Part D costs if you have limited income and resources. In 2022, eligibility is open to individuals who make less than $19,320 a year and have less than $14,790 in savings and investments. Couples that make less than $26,130 a year and have less than $29,520 in savings and investments also qualify for Extra Help.
With Extra Help, your prescription costs are $3.95 for each generic drug and $9.85 for each brand-name drug. Also, you won’t pay a penalty if you enrolled late in Part D.
Is Medicare Part D deducted from Social Security?
You need to contact your Part D plan to have your premium deducted from your monthly Social Security payment. You also can reverse that decision and be billed directly.
When can I enroll?
There are several times when you can sign up for Medicare Part D.
Initial Enrollment Period
You can sign up for Part D when you first become eligible for Medicare. You’ll have a seven-month window, starting three months before you turn 65 and ending three months after the month you turn 65. This is called the Initial Enrollment Period.
Open Enrollment Period
You can join, drop or switch a Part D plan during the Open Enrollment Period from October 15 to December 7.
Medicare Advantage Open Enrollment Period
If you have a Medicare Advantage plan, you can move to a different plan or switch to Original Medicare and join a standalone Part D plan between January 1 to March 31.
Other Enrollment Opportunities
If you don’t have Medicare Part A and you’ve enrolled in Part B during General Enrollment, you can sign up for Part D from April 1 to June 30.
Where do I find Medicare Part D plans?
You can find and compare Medicare drug plans with the Medicare Plan Finder at www.medicare.gov/plan-compare.
How do I join a Medicare drug plan?
Once you find a Part D plan you like, there are several ways you can enroll:
- Medicare Plan Finder or the plan’s website
- Paper enrollment form
- Calling the plan
- Calling Medicare at 1-800-633-4227
Make sure to have your Medicare card when you sign up.
Where can I find a primary care physician who accepts Medicare patients?
Along with your Medicare prescription drug coverage, you’ll want to find a primary care doctor near you who takes your insurance.
NewPrimaryCare.com can help. Our preferred providers practice value-based care, meaning Medicare rewards them for helping their patients get better.
With a value-based care provider, you can expect quicker appointment scheduling, shorter waits at the doctor’s office and a meaningful connection with your physician, who will take the time to know you and your needs.
Use our Find Your Doctor tool to search for and compare value-based care providers near you.
