Medicare Prescription Drug Coverage- Part D

Medicare offers prescription drug coverage to everyone with Medicare. If you decide not to join a Medicare drug plan when you’re first eligible, and you don’t have other creditable prescription drug coverage, or you don’t get Extra Help, you’ll likely pay a late enrollment penalty.

To get Medicare prescription drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and drugs covered.

There are two ways to get Medicare prescription drug coverage:

Medicare Prescription Drug Plans.These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.

Medicare Advantage Plans (like an HMO or PPO) or other Medicare health plans that offer Medicare prescription drug coverage. You get all of your Part A and Part B coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.

Both types of plans are called “Medicare drug plans.” In either case you must live in the service area of the Medicare drug plan you want to join.

What Part D Plans Cover

Each plan has its own list of covered drugs (called a formulary). Many Medicare drug plans place drugs into different "tiers" on their formularies. Drugs in each tier have a different cost.

For example, a drug in a lower tier will generally cost you less than a drug in a higher tier. In some cases, if your drug is on a higher tier and your prescriber (your doctor or other health care provider who is legally allowed to write prescriptions) thinks you need that drug instead of a similar drug on a lower tier, you or your prescriber can ask your plan for an exception to get a lower copayment.

Drug Plan Coverage Rules

Medicare drug plans may have the following coverage rules:

Prior authorization - You and/or your prescriber must contact the drug plan before you can fill certain prescriptions. Your prescriber may need to show that the drug is medically necessary for the plan to cover it.

Quantity limits - Limits on how much medication you can get at a time.

Step therapy - You must try one or more similar, lower cost drugs before the plan will cover the prescribed drug.

If you or your prescriber believe that one of these coverage rules should be waived, you can ask for an exception.

What You Pay for Medicare Drug Coverage

You'll make these payments throughout the year in a Medicare drug plan:

Monthly Premium:
Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B premium. If you belong to a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium you pay to your plan may include an amount for prescription drug coverage.

Yearly deductible

Copayments or coinsurance

Costs in the Part D Coverage Gap:
Most Medicare drug plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Also, people with Medicare who get Extra Help paying Part D costs won't enter the coverage gap.

Costs if you get Extra Help:
Extra Help/Low-Income Subsidy - If you meet certain income and resource limits, you may qualify for Extra Help from Medicare to pay the costs of Medicare prescription drug coverage. How to Apply for Extra Help - Apply online at Social Security or call Social Security at 1-800-772-1213 to apply by phone or get a paper application.

You automatically qualify for Extra Help if you have Medicare and meet any of these conditions:

Have full Medicaid coverage

Get help from your state Medicaid program paying your Part B premiums (in a Medicare Savings Program)

Get Supplemental Security Income (SSI) benefits.

Costs if you pay a Late Enrollment Penalty:
What Is the Part D Late Enrollment Penalty? The late enrollment penalty is an amount added to your Part D premium. You may owe a late enrollment penalty if, at any time after your initial enrollment period is over, there is a period of 63 or more days in a row when you don't have Part D or other creditable prescription drug coverage. The cost of the late enrollment penalty depends on how long you went without creditable prescription drug coverage.