Medicare Part D
Medicare Part D includes a variety of plans for prescription drug coverage. Plans are sold by private insurance companies and will lower the cost of prescriptions instead of paying the full price for medications. Part D members will pay a copay. There are a few unique features of Part D that beneficiaries need to understand.
The copay for prescription drugs will vary depending on which coverage phase the individual is in. Individuals with low-cost medications will not move through the phases as quickly as those with more expensive medications.
There are four Part D coverage phases.
The very first coverage phase in Part D plans is the deductible phase. Individuals are responsible for the deductible amount as indicated by their specific plan.
Often, tier one drugs (common, generic drugs) do not apply to the deductible.
If a deductible is indicated, an individual must meet that prior to receiving coverage for the prescription drugs. Currently, no plan may exceed a $445 deductible.
TrOOP stands for True Out-of-Pocket costs, and it refers to the maximum out-of-pocket expense for Medicare Part D plans. In 2021 the TrOOP amount was $6550. Once this amount has been met by an individual, catastrophic coverage begins. As we mentioned earlier, catastrophic coverage significantly reduces the member’s prescription drug expenses for the remainder of the year.
Even if you switch plans mid-year, the amount you paid in your previous plan counts towards the new plan’s deductible, coverage gap, and total TrOOP amount. Members will receive an EOB each time they fill a prescription. The year-to-date TrOOP amount can usually be found on the EOB.
Part D Annual Premiums
Premiums for Part D plans will vary based on the insurance carrier. The average monthly premium for Medicare beneficiaries is $33.06.
Individuals with a higher income may pay a higher premium. The additional charge is called the income-related monthly adjustment amount. If the individual incurred a late enrollment penalty, that amount would also be added to the monthly premium.
There is financial assistance available to those with low incomes. Individuals must meet certain requirements in order to be eligible for assistance.
Is Medicare Part D mandatory?
Individuals are not required to enroll in a Part D plan. However, delaying enrollment without other creditable coverage in place will cause the individual to incur late enrollment penalties. Once penalties have been applied, they will never be removed.
Even if an individual is not currently taking medications, it is best to enroll in a Part D plan as soon as they are eligible. There are very low-cost plans available for those who take no medications.
Preferred Pharmacy Networks
Each Part D plan has its own requirements regarding which pharmacy its members use. Some plans will offer no coverage at certain pharmacies, and others may set some pharmacies as “preferred” and others as “standard.”
Using a preferred pharmacy will lower the out-of-pocket cost for medications.
Medicare Part D Deductible
Insurance companies set their own deductibles for each Part D plan. Oftentimes, the deductible only applies to drugs in tier two and above. Common, generic drugs are usually in tier one, where the deductible does not typically apply. However, this varies by plan, and individuals should be sure to check which of their medications must meet the deductible.