It’s a very technical question with several moving parts, so let’s break this down.
Medicare Part D is insurance coverage designed to help you save money on your prescription drugs. It’s not covered/managed directly by the federal government like Medicare Parts A and B are. An independent insurance company covers/manages it.
There are two main ways to get prescription drug coverage:
- You can purchase it as a standalone coverage (Part D Medicare Plan) from a private insurance carrier. This plan only covers prescription drugs.
- You can obtain it by enrolling in a Medicare Advantage Prescription Drug plan (MAPD – Part C Medicare Plan). The MAPD plan includes prescription drug coverage as well as coverage for medical and hospital expenses.
If you get Part D coverage as a standalone plan, you will keep Medicare A and B as your primary health insurance. If your drug coverage is through an MAPD plan, you will no longer have Medicare A and B. Your health insurance will be managed by the MAPD insurance company.
Guidelines to follow
Regardless of whether you get your prescription drug coverage from a standalone Part D plan or if it comes as part of an MAPD plan, there are guidelines for each company to follow. Unfortunately, the guidelines leave room for minor differences within each plan, making shopping for coverage more complicated and difficult. Let’s review some of the guidelines:
These rates are for Prescription drug coverage in 2020 per the Center for Medicare Services (CMS).
Each year, the pharmacies, insurance companies, and drug manufacturers agree on the actual drug costs. This is called the retail cost of the drug. The first $435 of retail drug costs could be billed to the member (you). That means the insurance company does not have to cover any of the initial $435 in costs if they don’t want to. That’s why you see plans with a deductible and plans without a deductible because Medicare leaves the decision up to the insurance carrier. Whether or not you pay a deductible doesn’t always mean one plan is better than the other.
There are other factors to take into consideration, so let’s look at some of them.
If a plan does have a deductible, you pay for your drug costs until the amount reaches the deductible amount. After you reach that deductible amount, the insurance company will make you pay either a copayment or coinsurance for your prescription drug(s) for the rest of the year. A copayment is a fixed rate, such as $45 per medication fill. Coinsurance is a percentage of the cost of the drug, such as 10% of the cost.
Plans that don’t have a deductible usually start offering these copayment or coinsurance payment schedules to their members at the beginning of the year.
Here is where things get trickier. The insurance company doesn’t just keep track of the first $435 of drug costs. They keep a running tally of all your retail drug costs. If your total retail drug costs reach $4,020 for the year, they then move you to a different payment strategy. This is called the “Coverage Gap.” You will be responsible for a coinsurance percentage for the majority of your medications. Some plans could continue to provide coverage for generic drugs, but most plans will charge you 25% for brand name medications.
Once you reach $6,350 in retail costs for the year, you move into a different payment strategy, and your coinsurance will drop to 5%. If you have a lot of prescription drugs or expensive drugs, the portion of the costs you must pay for them could change several times throughout the year.
How can I get a Part D plan?
You have several options to help you select the best Part D plan for you:
- You can do the research yourself and run a drug report to determine what plans in your area will be the most affordable based on your situation. You can use www.medicare.gov to do this. A caution: Medicare made changes in the fall of 2019, making this site a little less user friendly. You will need to make a cost comparison of the different plans available. You need to consider each plan’s monthly premium, the plan’s yearly deductible, and the cost of each of your medications.
- You can call Medicare to help you at 1-800-633-4227 and provide them with a list of your medications. Be aware that you will be chatting with someone who takes calls from people from all over the county. They might not specialize in working with plans that are just in your area.
- You can work with a Medicare Insurance broker, like the ones at Hitcho Insurance. We will be able to educate, endorse, and enroll you in a plan that fits your needs based on your current prescriptions. You will not pay a fee for this service, and you will not pay a higher premium to the insurance carrier.
If you have any questions about enrolling in Medicare Part D or want to work with us as your Medicare brokers, give us a call at 610-694-9435 to receive your free consultation.
