Medicare Part D

What is it? Medicare Part D Is the prescription drug program partially funded by the government.  There are approximately 30 different Part D plans available in each state.

Who offers Part D plans? Part D coverage is regulated by the government but is purchased from an approved insurance company

Am I required to buy one? The government wants everyone who is eligible to have a Medicare Part D plan, but they cannot force you to buy one.  However if you do not enroll in a part D plan, the government will start the clock on a penalty. For every month you forgo enrollment the penalty amount increases by 1%. So if you wait five years to enroll in a plan that is going to equate to a 60% monthly penalty which will last the rest of your life.

How can I avoid a penalty? Obviously you can avoid a penalty if you sign up for a Part D plan. Alternatively, if you have prescription drug coverage from an employer sponsored plan, that counts as creditable coverage, you can defer enrollment indefinitely.

What if I am not taking any prescriptions? It is still advisable to enroll in a Part D plan because none of us know exactly when our health will change and a costly prescription will be warranted. Medicare only allows for enrollments at specific time periods during the year, so if you don’t select a plan when eligible you may be waiting many months to get coverage.  You would also have to pay the non-enrollment penalty if there was a gap in your coverage.

Plans can be had for less than $10 in most states so it is usually a wise decision to enroll.

What type of costs can I expect to incur with a Part D Plan? There are four main expenses that you may incur:

• Monthly premium: This is the amount you pay on a monthly basis to the insurance company for your Part D coverage
• Deductible: This is the amount that you will be expected to pay out of your pocket towards your prescriptions before the plan kicks in. The maximum deductible is set by Medicare every year. Many plans will waive the deductible on generic prescriptions.
• Co-Pays: This is the amount that you will pay at the pharmacy for your prescriptions after your deductible (if any) is met. Pharmaceuticals will typically be categorized into Five Tier classifications. Tier 1 and Tier 2 will encompass most generic prescriptions. Most Tier 1 & Tier 2 Medications will have little to no co-pays.  These will generally be your popular generic prescriptions. Tier 3 & Tier 4 will be your brand name prescriptions and other scrips that are expensive to manufacture like insulin, inhalers, creams etc.  Expect to have to pay the deductible before getting any co-pay reduction on a Tier 3 & 4 prescription.  Tier 5 scripts are typically going to be the most expensive specialty drugs that usually will have a more reasonable alternative.
• Coverage Gap (Donut Hole): The coverage gap is a reality for many Part D enrollees if they are taking expensive prescriptions – think Tier 3-5. What is it? The Coverage Gap references the a rather unpleasant situation where you co-pays will increase significantly mid-year.  This occurs if the full retail cost of your drugs hits a annually determined benchmark of around $4,000. Be cognizant that it doesn’t mean you have to personally outlay $4,000 before you enter the donut hole but rather that the full cost of your drugs hits the $4,000 mark, you will then enter the Coverage Gap.  Example: If you are taking a $1,000/month drug and paying say a $50 co-pay per month, you will enter the Coverage Gap after month four. No one likes this because your co-pay may jump up from $50 to say $200. The good news is your Catastrophic Coverage kicks in later to prevent folks from getting really burned on drug costs.

Medicare takes all the guess work out of it for you by providing a handy tool on their website. The video below will show you the steps to determine the proper Part D coverage for your prescriptions.  If you’re not too internet savvy or would prefer our assistance,  and plan on engaging our firm for a Medicare Supplement, feel free to give us a call: 800-431-1946