Medicare Part D is a federal program administered through private insurance companies. These companies offer retail prescription drug coverage to Medicare beneficiaries. Beneficiaries can enroll in a standalone Part D drug plan that goes alongside their Original Medicare benefits, or they can choose a Part D drug plan that is built-in to a Part C Medicare Advantage Plan.
Medicare part D is simply insurance for your medication needs. You pay a monthly premium to an insurance carrier for your Part D plan. In return, you use the insurance carrier’s network of pharmacies to purchase your prescription medications. Instead of paying full price, you will pay a copay or percentage of the drug’s cost. The insurance company will pay the rest.
In 2019, the allowable Medicare Part D deductible is $415. Plans may charge the full Part D deductible, a partial deductible, or waive the deductible entirely. You will pay the network discounted price for your medications until you have satisfied the deductible. After that, you enter initial coverage.
During this stage of Part D drug coverage, you will pay a copay for your medications based on the drug formulary. Each drug plan will separate its medications into tiers. Each tier has a copay amount that you will pay. For example, a plan might assign a $4 copay for a Tier 1 generic medication. Maybe Tier 3 is a preferred brand name for a $42 copay, and so on. The insurance company tracks the spending by both you and the insurance company until you have together spent a total of $3,820 in 2019.
After you’ve reached the initial coverage limit for the year, you enter the coverage gap. During the gap, you will still generally have significant discounts for generic medications. You will pay only 25% of your brand name drugs, and 37% for generics. In 2019 your gap spending will continue until your total out of pocket drug costs has reached $5,100.
After you’ve reached the end of the coverage gap, you pay the greater of 5% of the drug cost, or $3.40 copay for generics and $8.50 copay for all other drugs.
Your plan’s benefits, formulary, pharmacy network, provider network, premium and/or copayments/co-insurance may change on January 1st of each year. Medicare gives you an annual election period during which you can change your plan if you desire to do so.
All insurance agents at Heartland Insurance train extensively to carefully analyze your potential drug spending in the coming year. We can help you find a plan that offers you the lowest possible annual drug spending.
We understand how confusing this may be, and we are here to help. Schedule a counseling session with one of our trusted advisors. During this session, your advisor will explain how Medicare works, what actions you need to take, costs and more.
