Medicare Part D

Senior farmer living in Texas thinking if is Medicare Part D is enough coverage

Medicare Part D is a type of Medicare plan that is sold by private insurance companies approved by Medicare. If you are 65 years old or older or, and you are already enrolled in Medicare, you are automatically also eligible for Medicare Part D which provides you with prescription drug coverage and is purchased by many Medicare enrollees.

Medicare Part D provides prescription drug coverage with copayments as little as $1, depending on the drug. Part D can be added to your Original or supplemental Medicare coverage to help pay astoundingly high out-of-pocket drug costs, and most Advantage plans already have Part D coverage included in their list of benefits.

Each time you receive a prescription with a Part D plan, you will have to pay a small amount known as either a copayment or coinsurance fee. The amount you pay depends solely on the type of drug you receive.

Prescriptions are categorized into 5 groups, or tiers. As a whole, this is referred to as a Medicare Part D formulary. Formularies will vary slightly depending on the plan and provider you choose, but these tiers are consistent across the board:

  • Tier 1: Preferred Generic
  • Tier 2: Non-Preferred Generic
  • Tier 3: Preferred Brand-Name
  • Tier 4: Non-Preferred Brand-Name
  • Tier 5: Specialty

What does
Medicare Part D cover?

Medicare Part D has a list of prescription medications it covers. This list is also known as the formulary which contains all the prescription drugs Part D offers coverage for. If a drug you need is not on the Part D formulary, you may have to request an exception, pay out of pocket for drug expenses, or file an appeal with which you can contact your plan provider and ask them to reconsider their decision. Nevertheless, Part D coverage varies depending on the plan and the insurance company that provides covered drugs.

All Medicare Part D plans must cover antipsychotics, HIV medications, cancer treatment drugs, antidepressants, anticonvulsants, and immunosuppressants. The only exception to consider is that Medicare Part D doesn’t cover vaccines covered by Medicare Part B. Other than that, most vaccines are covered.

However, Part D formularies do not contain dietary supplements, hair loss treatments, weight loss and weight control drugs, and over-the-counter medications.

Medicare Part D Tier Systems

Each time you receive a prescription with a Part D plan, you will have to pay a small amount known as either a copayment or coinsurance fee. The amount you pay depends solely on the type of drug you receive.

All Part D plan formularies have a tier system through which drugs are classified. In other words, prescriptions are categorized into 5 groups or tiers.

As a whole, this is referred to as a Medicare Part D formulary. Formularies will vary slightly depending on the plan and provider you choose, but these tiers are consistent across the board:

  • Tier 1: Preferred Generic
  • Tier 2: Non-Preferred Generic
  • Tier 3: Preferred Brand-Name
  • Tier 4: Non-Preferred Brand-Name
  • Tier 5: Specialty

 

In general, the expenses of a drug in a lower tier will be smaller than those of a drug in a higher tier. In some cases, you can ask for financial help to secure yourself the medication you need.

Tiers 1 And 2

Tiers are listed by increasing price, meaning that tiers 1 and 2 are the least expensive drugs on the list. But what do these terms mean?

Preferred drugs will always be less expensive than their non-preferred counterpart. They’re “preferred” simply because they have been on the market for a while and have been proven effective, whereas non-preferred are relatively new and have not had a chance to decrease in price.

This is where the price difference between the two tiers comes from. You can expect to pay anywhere from:

  • $1-$3 for drugs in Tier 1
  • $7-$11 for drugs in Tier 2

 

What is the difference between generic and brand-name drugs? Think of the cereal aisle in the grocery store—Lucky Charms is the brand-named cereal, while Marshmallow Mateys is its generic equivalent.

And, like brand-name cereal, brand-name prescriptions are more expensive than their generic counterpart. Often, generic drugs have identical active ingredients as their brand-name equivalent—meaning that they will do their job just as well as their costly competitor.

Tiers 3 And 4

The same can be said for tiers 3 and 4, except now we have entered the more expensive brand-name category. You and your doctor(s) should always seek out prescriptions in tiers 1 and 2 first, but, if there is no generic equivalent, you will have to pay for the brand-name.

Like tiers 1 and 2, tier 3 will cost less than tier 4 because it is preferred. For both tiers, however, you can expect to pay more out-of-pocket than the first 2 tiers, with prices ranging anywhere from:

  • $38-$42 for tier 3 prescriptions
  • 45-50% of the total drug cost for tier 4 prescriptions

Tier 5

Tier 5 covers specialty prescriptions, and are the most expensive on the list. These drugs, however, fall somewhat into their own category, meaning that it may be hard to accurately compare them to the other 4 tiers.

With this tier, there are no brand-name, generic, preferred or non-preferred options. They are targeted towards very specific ailment, hence the name “specialty.”

For drugs in this tier, you will also pay 45-50% of the total cost, like tier 4. Unlike tier 4, however, these prescriptions cost more overall, thus raising the price of your percentage contribution.

Medicare Part D Cost

Depending on the type of medication that is in question, and some other factors, the Part D plan’s deductibles may vary from $0 deductibles to a high amount deductible.

Part D enrollees must pay monthly premiums, copayments, and coinsurance costs in order for their coverage to continue.

Other factors which affect the cost of Part D plans are location, income, and the type of medications that are covered by the plan as well as the tier classification of the medication. Since the coverage may change each year, this also affects the plan’s cost.

Most people enrolled in a Part D plan have out-of-pocket prescription drug costs which may include:

  • An annual deductible (maximum $505)
  • A monthly Part D plan premium (average premium in 2023 will be $31.50)
  • A cost-sharing portion of plan-covered drugs (either a copayment or coinsurance) during the Initial Coverage Period
  • A percent of the cost of drugs once you pass the Initial Coverage Period (and enter what used to be called the coverage gap) and
  • If you reach the Catastrophic Benefit Period in the Part D drug benefit, minimal drug copayments or coinsurance costs.

 

The average monthly premium for a Part D plan is projected to be $31.50 in 2023, although keep in mind that plans vary depending on various factors previously mentioned.

Medicare Part B
Enrollment and Eligibility

The eligibility requirements for Medicare Part D are the same as the ones for Part A and Part B. This means that you are qualified for Part D if you are 65 years old or older, are a younger person with disabilities, or if you have End Stage Renal Disease (permanent kidney failure requiring dialysis or transplant).

People who are also eligible are the ones who have received Social Security Disability Insurance (SSDI) benefits for more than 24 months.

Once you determine you are eligible for Medicare Part D, you should consider these next enrollment time periods during which you can enroll in a plan.

Initial Enrollment Period

At the time you turn 65 years old and become officially eligible for Medicare, you can add a stand-alone Part D plan or join a Medicare Advantage plan with drug coverage.

If after your Initial Enrollment Period there are 63 days in a row where you don’t have Medicare drug coverage or other credible drug coverage (a drug plan that amounts to at least as much as Medicare Part D coverage), you will have to pay the late enrollment penalty.

To avoid paying the late enrollment penalty, make sure you enroll in Part D on time or have other credible drug coverage during your Initial Enrollment Period.

Annual Election Periods

The Annual Election Period happens every year from October 15th to December 7th. During this period you can join, change or drop a plan with your new coverage becoming active on January 1st. During this period, you can also get the Medicare Advantage plan or switch back to Original Medicare.

Medicare Advantage Open Enrollment Period

If you are enrolled in a Medicare Advantage Plan, every year from January 1st until March 31st, you can switch to a different Medicare Advantage Plan or switch to Original Medicare (and join a separate Medicare drug plan).

It is important to note that you can make changes only once during this time.

Special Enrollment Period

During this period you can make changes to your Medicare Advantage and Medicare prescription drug coverage when certain events happen in your life.

Certain life events that trigger this period could be losing health coverage, moving, getting married, having a baby, or adopting a child, or if your household income is below a certain amount.

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Medicare Part D​

Senior farmer living in Texas thinking if is Medicare Part D is enough coverage

Medicare Part D provides prescription drug coverage with copayments as little as $1, depending on the drug. Part D can be added to your Original or supplemental Medicare coverage to help pay astoundingly high out-of-pocket drug costs, and most Advantage plans already have Part D coverage included in their list of benefits.

Each time you receive a prescription with a Part D plan, you will have to pay a small amount known as either a copayment or coinsurance fee. The amount you pay depends solely on the type of drug you receive.

Prescriptions are categorized into 5 groups, or tiers. As a whole, this is referred to as a Medicare Part D formulary. Formularies will vary slightly depending on the plan and provider you choose, but these tiers are consistent across the board:

Tiers 1 and 2

Tiers are listed by increasing price, meaning that tiers 1 and 2 are the least expensive drugs on the list. But what do these terms mean?

Preferred drugs will always be less expensive than their non-preferred counterpart. They’re “preferred” simply because they have been on the market for a while and have been proven effective, whereas non-preferred are relatively new and have not had a chance to decrease in price.

This is where the price difference between the two tiers comes from. You can expect to pay anywhere from:

What is the difference between generic and brand-name drugs? Think of the cereal aisle in the grocery store—Lucky Charms is the brand-named cereal, while Marshmallow Mateys is its generic equivalent.

And, like brand-name cereal, brand-name prescriptions are more expensive than their generic counterpart. Often, generic drugs have identical active ingredients as their brand-name equivalent—meaning that they will do their job just as well as their costly competitor.

Tiers 3 and 4​

The same can be said for tiers 3 and 4, except now we have entered the more expensive brand-name category. You and your doctor(s) should always seek out prescriptions in tiers 1 and 2 first, but, if there is no generic equivalent, you will have to pay for the brand-name.

Like tiers 1 and 2, tier 3 will cost less than tier 4 because it is preferred. For both tiers, however, you can expect to pay more out-of-pocket than the first 2 tiers, with prices ranging anywhere from:

Tier 5

Tier 5 covers specialty prescriptions, and are the most expensive on the list. These drugs, however, fall somewhat into their own category, meaning that it may be hard to accurately compare them to the other 4 tiers.

With this tier, there are no brand-name, generic, preferred or non-preferred options. They are targeted towards very specific ailment, hence the name “specialty.”

For drugs in this tier, you will also pay 45-50% of the total cost, like tier 4. Unlike tier 4, however, these prescriptions cost more overall, thus raising the price of your percentage contribution.

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