Medicare Part D is a federal program administered through private insurance companies. These companies offer retail prescription drug coverage to Medicare beneficiaries. Prior to 2006, when the Medicare Part D began, tens of thousands of Medicare beneficiaries in America had little help with retail drug costs. They would often spend thousands of dollars each year paying for their medications out of pocket.
Fortunately, today’s Medicare beneficiaries have better coverage with Part D. 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.
What is Part D? It is an optional prescription drug program for people on Medicare.
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.
Your Part D insurance card will be separate from your Medigap plan.
Medicare Part D plans all follow federal guidelines. Each insurance carrier must submit its plan outline to the Centers for Medicare and Medicaid Services annually for approval.
To improve your understanding of Medicare Part D, let’s look at the basic way that each Part D plan works:
There are 4 stages to a Part D drug plan, as follows:
It’s important to note that Medicare itself tracks your True Out of Pocket Costs (TrOOP) for each year. This can protect you from paying certain costs twice. For example, say you have already satisfied the deductible on one plan. Then you later switch mid-year to a different Medicare Part D plan because you moved out of state. Your new plan will already see that you have paid the deductible for that year. The costs for coverage gap and catastrophic coverage work the same way.
Part D drug plans also have changes from year to year. Your plan’s benefits, formulary, pharmacy network, provider network, premium and/or co-payments/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.
Medicare allows drug plan carriers to apply certain rules for safety reasons and also for cost containment. The most common utilization rules that you may run into are:
Your overall Medicare prescription costs can be affected by these restrictions. Always check your medications in the plan formulary to see if restrictions apply to any of your important medications.
ALL of these 3 types of restrictions occur throughout the formularies of every Part D drug plan in the market. They are especially common with pain medications, narcotics and opiates. If you take a significant amount of pain medication, be prepared that you will deal with his extra paperwork on regular basis no matter which drug plan you choose.
People often think that changing from one drug plan to another will help. However, nearly all Part D carriers have restrictions on pain meds. You will encounter this no matter which plan you are on. The best you can do is to pick a carrier with the lowest overall annual anticipated spending. Then file the required exception forms to try to get as much approved as the plan will allow.
There are also some medications which are not covered by Part D. If you take a medication that is not on the formulary, such as a compound medication, you will have to file an exception to try to get that drug approved. Not all exceptions are approved, so be aware that you may pay out of pocket for any medication that is not covered by your plan or by Part D as a whole.
Part D drug plans are among the most confusing Medicare topics. All too often people join a plan without checking to make sure the formulary includes their medications. Sometimes they also miss that one of their medications has step therapy rules applied. Many beneficiaries also miss their initial enrollment window, so if you need drug coverage, be sure not to miss your window!
Yes, you will pay a monthly premium to the insurance company’s whose Part D plan that you enroll in. Everyone pays for Part D unless you qualify for Medicare’s Extra Help Program – Low Income Subsidy.
The monthly premiums are set by the insurance carriers and they vary widely. In most states you can find plans starting around $15/month.
Any Medicare beneficiary enrolled in either Part A and/or B can enroll in Medicare Part D. You must live in the plan’s service area as well.
Our agency does not recommend skipping Part D. Why risk it when most states have plans available for as low as around $15/month? Keep in mind that Part D is insurance not just for your medications today. It also insures you for any new medications that your doctors prescribe in the future.
There are hundreds of medications that cost hundreds or thousands of dollars per year. These would be difficult to afford without coverage. If you are still not sure, please read our article about Why You Need Part D.
At our agency, we assist our Medicare supplement clients with their annual Part D drug plan analysis for free. This free assistance is limited exclusively to our Medigap and Medicare Advantage policyholders. We’ll identify which plan gives you the lowest annual spending and the least restriction hassles. Then we’ll provide free claims support for the life of your policy.
Don’t forget that Part D is voluntary! If you wish to enroll, you must contact your agent during a valid election period to initiate the conversation.