Medicare Drug Plans

How to get drug coverage

Medicare prescription drug coverage is an optional benefit. Medicare offers prescription drug coverage to everyone with Medicare. If you decide not to get Medicare drug coverage when you’re first eligible, you’ll likely pay a late enrollment penalty if you join later, unless one of these applies:

• You have other creditable prescription drug coverage
• You get Extra Help

Generally, you’ll pay this penalty for as long as you have Medicare prescription drug coverage.

To get Medicare drug coverage, you must join a plan approved by Medicare that offers Medicare drug coverage. Each plan can vary in cost and drugs covered.

2 ways to get drug coverage

• Medicare Prescription Drug Plan (Part D). These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
• Medicare Advantage Plan (Part C) (like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Out-Patient Services) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.

Joining a Medicare Drug plan may affect your Medicare Advantage Plan    

Your Medicare Advantage Plan (Part C) will disenroll you and you’ll go back to Original Medicare if both of these apply:

• Your Medicare Advantage Plan includes prescription drug coverage.
• You join a Medicare Prescription Drug Plan (Part D)

What drug plans cover

Each Medicare drug plan must give at least a standard level of coverage set by Medicare. Plans can vary the list of prescription drugs they cover (called a formulary) and how they place drugs into different “tiers” on their formularies.

How does Medicare Part D work?

There are 4 stages to a Part D drug plan, as follows:

• Annual Deductible – in 2025, the allowable Medicare Part D deductible is $590. 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 your plan tallies that you have satisfied the deductible. After that, you enter the initial coverage phase.

• Initial Coverage Phase – during this stage of Part D drug coverage, you will pay a copay or co-insurance percentage of retail cost for your medications based on the drug formulary. Each drug plan will separate its medications into tiers. Each tier has a copy or co-insurance amount that you will pay. For example, a plan might assign a $0 copay for a Tier 1 and Tier 2 generic medication. In Tier 3, for preferred brand name drugs, you may pay a $45 copay, and so on. Once you have paid a total amount of $2,000 for the year, including any deductible amount the plan may have, then you don’t pay any more for your drugs for the remainder of the year.  So, $2,000 is the max out-of-pocket for your covered prescription drugs for the year.
• Catastrophic Coverage Phase -  You pay $0

What are Tiers?

To lower costs, many plans place drugs into different “tiers” on their formularies. Each plan can divide its tiers in different ways. Each tier costs a different amount. Generally, a drug in a lower tier will cost you less than a drug in a higher tier.

Here’s an example of a plan’s tiers (your plan’s tiers may be different):

• Tier 1—lowest copayment: most generic prescription drugs
• Tier 2—medium copayment: non-preferred generic prescription drugs
• Tier 3—higher copayment: preferred brand-name prescription drugs
• Tier 4-  higher copayment: non-preferred brand-name prescription drugs
• Tier 5- Specialty tier—highest copayment: very high-cost prescription drugs

In some cases, if your drug is in a higher (more expensive) tier and your physician thinks you need that drug instead of a similar drug on a lower tier, you can file an exception and ask your plan for a lower copayment.

Part D late enrollment penalty

The late enrollment penalty is an amount added to your Medicare Part D monthly premium. You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:

• A Medicare Prescription Drug Plan (Part D)
• A Medicare Advantage Plan (Part C) (like an HMO or PPO)
• Another Medicare health plan that offers Medicare prescription drug coverage
• Creditable prescription drug coverage, such as through yours or your spouse’s employer
• Note (Heather, this note area and the line below should be shaded a light grey)
  If you get Extra Help, you don't pay the late enrollment penalty.

How much is the Part D penalty?

The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage.

Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" ($33.19 in 2019) times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly penalty is rounded to the nearest $.10 and added to your monthly Part D premium.

The national base beneficiary premium may increase each year, so your penalty amount may also increase each year.

Example:

Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2015. She doesn't have prescription drug coverage from any other source. She didn't join by May 31, 2015, and instead joined during the Open Enrollment Period that ended December 7, 2017. Her drug coverage was effective January 1, 2018.

2018 - Since Mrs. Martinez was without creditable prescription drug coverage from June 2015–December 2017, her penalty in 2018 was 31% (1% for each of the 31 months) of $35.02 (the national base beneficiary premium for 2018) or $10.86. Since the monthly penalty is always rounded to the nearest $0.10, she paid $10.90 each month in addition to her plan's monthly premium.

5 things to look for when choosing Medicare drug coverage

1. I take specific drugs
Look at drug plans that include your drugs on their formulary (a list of prescription drugs covered by a drug plan). Then, compare costs.

2. I take specific drugs I want extra protection from high prescription drug costs
Look at plans offering coverage in the coverage gap, and then check with those plans to make sure they cover your drugs in the gap.

3. I take a lot of generic prescriptions
Look at plans with “tiers” that charge you no deductible and nothing or low copayments for generic prescriptions.

4. I don’t have many drug costs now, but I want coverage for peace of mind to avoid future penalties
Look at plans with a low monthly premium for drug coverage. If you need prescriptions in the future, all plans still must cover most drugs used by people with Medicare.

5. I like the extra benefits and lower costs available by getting my health care and prescription drug coverage from one plan, and I’m willing to accept the plans restrictions on what doctors, hospitals, and other health care providers I can use
Look for a Medicare Advantage Plan (Part C) with prescription drug coverage.

Call Progressive Concepts Insurance for a free consultation and quote your Part D prescription drug plan today.