Medicare Part D plans, or Medicare Prescription Drug plans, provide the prescription drug coverage that is not included in Medicare A and B, certain Medicare Cost Plans, Medicare Private Fee-for-Service (PFFS) Plans and Medicare Medical Savings Account (MSA) Plans. In order to get Medicare Part D coverage, you must join a plan run by an insurer or another private company approved by Medicare. Medicare Part D plans can vary in cost and drugs covered. At HealthPocket, you can use our Medicare Plan Comparison Tool to find the right Medicare Part D plan in order to minimize your out-of-pocket Medicare drug costs.1
An individual enrolled in any Medicare Part D plan will incur out-of-pocket costs each year associated with their Prescription Drug Plan:
Typically, consumers pay a monthly premium for Medicare part D plans. With respect to Medicare Part D plans, the U.S. average premium in 2020 is $42.05, which is less than a dollar more expensive than the average premium in 2019. If you make above $87,000 individually or above $174,000 jointly with your spouse, you will have to pay an additional fee on top of your monthly Medicare Part D premium based on the following table.2
|If your filing status and yearly income in 2018 was|
|File individual tax return||File joint tax return||File married & separate tax return||You pay (in 2019)|
|$87,000 or less||$174,000 or less||$87,000 or less||your plan premium|
|above $87,000 up to $109,000||above $174,000 up to $218,000||not applicable||$12.20 + your plan premium|
|above $109,000 up to $136,000||above $218,000 up to $272,000||not applicable||$31.50 + your plan premium|
|above $136,000 up to $163,000||above $272,000 up to $326,000||not applicable||$50.70 + your plan premium|
|above $163,000 and less than $500,000||above $326,000 and less than $750,000||above $87,000 and less than $413,000||$70.00 + your plan premium|
|$500,000 or above||$750,000 and above||$413,000 and above||$76.40 + your plan premium|
A deductible is the amount a consumer must pay before their Medicare Part D Plan begins to pay its share of drugs covered by the plan. The list of drugs covered by a plan is also referred to as a plan’s drug formulary. Part D Plans can have different annual deductibles (some plans don't have any) but all Medicare drug plan deductibles have a cap (in 2020, the maximum annual deductible is $435). The average deductible for 2020 Part D plans is $345.36. The 2020 average is 21.70% higher than the 2019 average of $270.40.3
After you have paid the deductible, you generally must pay an amount for each of your prescriptions, either through a copayment or coinsurance. Coinsurance means you pay a fixed percentage of the drug cost whereas a copayment means you pay a set amount for each prescription. Certain Medicare Part D plans have varying levels of copays or coinsurance, depending on the type of drug.4 For example a plan could have a $10 copayment for a one-month supply of a generic drug, but 25% coinsurance for specialty drug prescriptions.
The Medicare Part D Coverage Gap (a.k.a. the Medicare Part D Donut Hole) is a period in which the plan covers a lower percentage of costs for prescription drugs. Most Medicare Part D plans have a coverage gap. Most Medicare Part D plans have a coverage gap. However people with Medicare who are also enrolled in the Extra Help program do not enter the coverage gap.5 Extra Help decreases certain cost-sharing factors such as premiums and deductibles for those who qualify.
In 2020 Medicare Part D enrollees will fall in the coverage gap when they and their plan together have spent at least $4,020 on covered prescription drugs. When an enrollee is in the coverage gap, they will pay no more than 25% of the plan’s costs for covered brand-name prescription drugs in 2020. However both the amount the enrollee pays for the drug and the drug manufacture’s discount payment will count toward total out-of-pocket costs for the purpose of exiting the coverage gap.
For generic drugs enrollees will have to pay 25% of the price in 2020 during the coverage gap. However the coinsurance that enrollees pay for generic drugs in the coverage gap will decrease every year until in 2020, when it will be reduced to 25%. Only the amount the enrollee pays for generic drugs will count toward their total out-of-pocket costs for the purpose of exiting the coverage gap. In 2020 the coverage gap ends when the enrollee has paid at least $6,350 in out-of-pocket costs (including drug manufacturer discount payments for brand-name drugs).
|Year||You’ll pay this percentage for brand-name drugs in the coverage gap||You’ll pay this percentage for generic drugs in the coverage gap|
Once enrollees have paid at least $6,350 in out-of-pocket costs (including the discount payment that the drug company pays for brand-name prescription drugs during the coverage gap) in 2020, the enrollee will be in catastrophic coverage. Once they are in catastrophic coverage, enrollees pay a small coinsurance or copayment for covered prescriptions for the remainder of the year. For example a plan could have cost-sharing during catastrophic coverage that is the greater of 5% coinsurance for all drugs or $3.60 copayments for generic drugs and $8.95 copayments for other drugs.6
A late enrollment penalty is added to an enrollee’s Medicare Part D premium if there are at least 63 days in a row after the enrollee’s initial enrollment period is over that the enrollee does not have qualifying coverage for prescription drugs such as Medicare Part D. Enrollees that qualify and get Extra Help do not have to pay the Part D late enrollment penalty.
In 2020 the monthly Part D late enrollment penalty is calculated by multiplying 1% of $32.74 (the national base beneficiary premium in 2020) times the number of whole months that the enrollee was eligible for creditable prescription drug coverage but did not have it.7
The least expensive 2020 Part D plan, with a premium of $12.80 per month, is the Clear Spring Health Premier Rx (PDP) in the state of California. In 2019, the least expensive Medicare drug plan was the WellCare Value Script (PDP) in Texas. It cost $10.40 per month, 18.75% lower than the least expensive plan in 2020. The most expensive Medicare Part D plan in 2020, with a premium of $191.40 a month, is the BlueCross Rx Plus (PDP) plan in South Carolina. In 2019, the most expensive Medicare Part D plan was the Blue Rx PDP Complete (PDP) plan in the state of Pennsylvania. It had cost $156.00 per month, 18.50% lower than in 2020.
No. You must be enrolled in Medicare Part A and/or Part B to enroll in the Medicare Part D plan.
First you should have Original Medicare Parts A and B. In order to compare costs for Medicare Part D plans, you can use a plan finder such as HealthPocket’s Medicare plan comparison tool. This comparison tool enables you to enter your prescriptions and estimate your total costs including premiums and prescription cost-sharing for each Medicare Part D plan that is available to you.
You can switch to a new Medicare Prescription Drug Plan (Part D) simply by joining another drug plan during the Open Enrollment Period for Medicare Advantage and Medicare prescription drug coverage. (October 15 – December 7)
You don’t need to cancel your old Medicare drug plan. Your old Medicare drug plan coverage will end when your new drug plan begins.
You can drop your Medicare Prescription Drug Plan (Part D) during the Open Enrollment Period, which is between October 15 and December 7 each year. The change goes into effect January 1 of the following year.
To disenroll from a Medicare Prescription Drug Plan during Open Enrollment, you can do one of the following:8
No one is required to have Medicare Part D coverage. However, if someone does not have creditable drug coverage starting by when they are first eligible for Medicare, then they may have to pay a Medicare Part D late enrollment penalty if and when they ever decide to buy a Medicare Part D plan. Other sources of creditable drug coverage besides Medicare Part D plans include Medicare Part C (Medicare Advantage) plans with drug components and plans through current or former employers or unions.
A straddle claim crosses two adjacent drug coverage periods. Straddle claims occur in three cases: crossing from the deductible period to the initial coverage period, the initial coverage period to the coverage gap, and the coverage gap to the catastrophic coverage period. Straddle claims that cross from the deductible period to the initial coverage period are divided into parts: the first part covers the remaining cost in the deductible period so the beneficiary pays the entire cost of the first part, while the second part is subject to initial coverage period cost-sharing rules.
Straddle claims that cross from the initial coverage period to the coverage gap are also divided into parts so that the first part covers the remaining cost in the initial coverage period and is subject to the rules of the initial coverage period, while the second part is subject to the cost-sharing rules of the coverage gap. Furthermore the dispensing fee must fall as much in the initial coverage period as possible for straddle claims between the initial coverage period and coverage gap.
Straddle claims between the coverage gap and the catastrophic coverage period are also divided into two parts so that the first part is subject to the rules of the coverage gap and covers the remaining out-of-pocket costs in the coverage gap, while the second part is subject to the rules of catastrophic coverage. As with the other straddle claims that intersect the coverage gap, the dispensing fee must fall as much out of the coverage gap as possible.
It is important to note that cost-sharing for any part of a straddle claim can only be as high as the total cost of the part. Your total cost-sharing for any drug prescription cannot exceed the actual prescription cost including the drug cost, the dispensing fee, and taxes.
The income-related monthly adjustment amount (IRMAA) sliding scale is a set of statutory percentage-based tables to adjust Medicare Part B and prescription drug coverage premiums. The higher the beneficiary’s range of modified adjusted gross income (MAGI), the higher the IRMAA will be.9
If the MAGI you reported in 2018 (or 2017 if 2018 is not available) was more than $87,000 annually as single, head-of-household or qualifying widow(er) with dependent child; or more than $174,000 as married, filing jointly, then you will have to pay a Part D IRMAA premium.
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