Medicare Part D

Medicare Part D

What is Medicare Part D?

Medicare Part D prescription drug coverage, often referred to as Part D, is provided and coordinated by Medicare-approved private insurance companies. Any beneficiary who is eligible for Original Medicare, Part A and/or Part B, and permanently resides in the service area of a Medicare Prescription Drug Plan, can sign-up for Medicare Part D. Medicare Part D coverage is optional, but if you don’t enroll in Part D as soon as you’re eligible, you might pay a late-enrollment penalty if you enroll later.

You can get Medicare Part D coverage through a stand-alone Medicare Prescription Drug Plan if you’re enrolled in Original Medicare. If you’re enrolled in a Medicare Advantage plan, you can get this coverage through a plan that includes drug benefits, also known as a Medicare Advantage Prescription Drug Plan. Different insurers offer different types of plans, so your monthly plan premium and out-of-pocket expenses for prescription drugs will vary from plan to plan.

Every Medicare Prescription Drug Plan has a formulary — that is, a list of covered drugs. The formularies vary among plans. The formulary may change at any time. You will receive notice from your plan when necessary.

 Finally, be aware that your plan may change its formulary. You may want to review the Annual Notice of Change.  that the plan sends you every fall to make sure it will still cover your prescription medications in the coming year. Coverage generally follows this pattern:

  • 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).
  • Once you have paid a certain annual maximum amount out of your own pocket for prescription drugs, you automatically get “catastrophic coverage.” This means for the rest of that particular year, you would only pay a small copayment or coinsurance amount for prescription drugs.

Be sure to talk to your doctor to see if you are taking the lowest cost medications available to you. Specific coverage may vary from plan to plan, so read your documentation carefully.

You may not know that under Medicare Part D, you may have a prescription drug coverage gap, often referred to as the “donut hole,” during which you’ll have limited or no prescription drug coverage. Find out exactly what this coverage gap is, and learn how to bridge the prescription drug coverage gap.


What is the Medicare coverage gap, also known as the donut hole?

Most Medicare Part D Prescription Drug Plans have a coverage gap, sometimes called the Medicare “donut hole.” This means that after you and your Medicare drug plan have spent a certain amount of money for covered prescription drugs, you then have to pay all costs out-of-pocket for the drugs, up to a certain out-of-pocket limit. The yearly deductible, coinsurance, or copayments, and what you pay while in the coverage gap, all count toward this out-of-pocket limit. The limit doesn’t include the drug plan’s premium.

There are Prescription Drug Plans that offer some coverage while you’re in coverage the gap; some plans provide coverage for generic drugs, for example. However, plans with gap coverage may charge a higher monthly premium. Check with the Prescription Drug Plan first to see if your drugs would be covered during the coverage gap.

Once you reach the plan’s out-of-pocket limit during the coverage gap, “catastrophic coverage” automatically kicks in. Catastrophic coverage means that when you’ve spent up to the plan’s out-of-pocket limit for covered drugs, you will only pay a small coinsurance amount or a copayment for the rest of the year.


Extra Help with the coverage gap

People who get Medicare Extra Help to pay drug costs won’t have a coverage gap and will pay a small or no copayment once they reach catastrophic coverage. Extra Help is a special part of Medicare prescription drug coverage that gives more assistance to people with limited incomes than the regular program does.

Qualifying for Extra Help can save a lot of money. If you qualify for “full” Extra Help, you receive coverage throughout the year (no coverage gap) and pay very little for your prescriptions. If you qualify for “partial” Extra Help, you receive coverage throughout the year and pay a reduced premium and deductible and up to 15% of the cost of your drugs.

Medicare Advantage Plan

Medicare Advantage plans are health plan options that are part of the Medicare program.  It is another plan choice you have as part of Medicare.  Medicare Advantage Plans are sometimes referred to as “Part C” or “MA Plans” and are offered by private health insurance companies that are approved by Medicare.

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Medicare Supplements

A Medicare Supplement policy (also called Medigap policy) helps you pay the “gaps” between what Original Medicare covers and the costs that are left over for you to pay out of your own pocket. Like copayments, coinsurance and deductibles for example.

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