The Basics of Medicare Part D Coverage

Medicare Part D Coverage 

Part D is an optional supplementary Medicare plan that covers prescription drugs and medications. If you do want Medicare Part D coverage, it is important to sign up when you are first eligible for it or you may have to pay an extra fee. It is important to check your plan every year to make sure your prescriptions are covered by your plan.

Note: The average cost for Medicare Part D is around $35/month. Medicare is broken up into 4 basic parts that determine what health coverage you receive.

Change in Formulary

Finally, be aware that your Medicare Part D coverage may change its formulary. You may want to review the Annual Notice of Change that the plan sends you every fall. This is to make sure it will still cover your prescription medications in the coming year.

Coverage generally follows this pattern: 

• Medicare Part D covers about $3,700 per year. Most Medicare Part D plans have a deductible. For 2019, there’s a $400 deductible. If the Prescription Drug Plan has an annual deductible, you pay the full amount of your prescription drug purchases until the deductible is met.
• After you satisfy the annual deductible, you will pay a share of the costs according to the terms and structure of your plan. Your share, which you typically pay to the pharmacy at the time of pickup, could be a flat amount (copayment) or a percentage of the total amount (coinsurance). Most generic prescriptions vary from $0-$12 per drug. Brand names are around $37- $47 per drug and specialty could be from 40-65% of the cost of the drug. Each prescription drug plan differs so it’s important to review the drugs you take and which drug plan covers them at a lowest cost. Once you’ve reach 3,700 for the year, you will reach donut hole. Your copay for brand name will go as high as 40% of the costs and you’ll pay 51% of the costs for generic drugs.
• Once you have paid a certain annual maximum amount out of your own pocket for prescription drugs, you automatically get “catastrophic coverage”. In 2019, you and the Part D plan should have paid $4,950 for the year to be out of donut hole. This means for the rest of that particular year, you would only pay a small copayment or coinsurance. This is around $3.30- $8.65 amount for prescription drugs.

How much is the Part D penalty?

There’s a late enrollment penalty depending on how long you went without Medicare Part D coverage or creditable prescription drug coverage. Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($35.63 in 2018) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The national base beneficiary premium may increase each year, so your penalty amount may also increase each year.