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Does Medicare offer you drug coverage? Does it automatically help you with the costs of your medication? This is important to know and yet very few are aware of the answers to a question like “What is Medicare Part D?” Many more are not aware of whether or not they should enroll in it.
In this article, we’ll provide clear answers to that question that could help you determine whether you should enroll. Too often, we mistakenly believe that enrolling in Medicare means we get prescription drug coverage, but that is not correct. Let’s ask some questions and get some answers!
To Get Answers, Ask Questions about Medicare Part D
If you are eager to get a answers to that question of “what is Medicare Part D and do I really need it?” you have to begin with a few questions of your own, for example:
Do you have prescription drug coverage from another health plan?
Do you have Medicare Part C coverage (also known as a Medicare Advantage Plan)?
Do you feel that you don’t need an answer to the question of “what is Medicare Part D” because you are sure you won’t get sick?
Is paying full price for medication not a problem?
You might have noticed that only half of those questions are reasonable and the other a bit more on the rhetorical side of things. This is because almost anyone can benefit from some prescription drug coverage. That means it is not so much a matter of precisely what is Medicare Part D, but what is it and just how much will you need its benefits.
So, what is Medicare Part D? Medicare prescription drug coverage is an optional benefit offered to everyone who has Medicare. These plans that are sometimes called PDPs and 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.” It can also be part of a Medicare Advantage Plan (Part C), such as a PPO or HMO or other Medicare health plan that offers Medicare prescription drug coverage. We will look at those in more detail a bit later.
Will You Need Medicare Part D Prescription Drug Coverage?
When you grow closer to your eligibility for Medicare, you may discover that there are a lot of different pressures and concerns. For example, some people may hesitate to enroll in the Part B portion of coverage because they have medical insurance coverage through another channel (such as insurance through their employer or that of a spouse). However, with each year that passes, the premiums go up 10% until you enroll. Hesitate five years and you are stuck with a Part B premium around 50% more than it would have been had you enrolled as soon as eligible.
No one wants (or should) pay more than what is anticipated for healthcare costs, including their medications. And yet, many are unaware of the Part D late enrollment penalty, too.
As CMS notes: “The late enrollment penalty (also called the “LEP” or “penalty”) is an amount that may be added to a person’s monthly Part D premium. A person enrolled in a Medicare drug plan may owe a late enrollment penalty if he or she goes without Part D or other creditable prescription drug coverage for any continuous period of 63 days or more after the end of his or her Initial Enrollment Period for Part D coverage. Generally, the late enrollment penalty is added to the person’s monthly Part D premium for as long as he or she has Medicare prescription drug coverage, even if the person changes his or her Medicare drug plan. The late enrollment penalty amount changes each year. The cost of the late enrollment penalty depends on how long the person went without Part D or other creditable prescription drug coverage.”
The term creditable coverage is “coverage that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage”. The late enrollment penalty is calculated by Medicare (not the plan) when a person subject to the penalty first enrolls in a Medicare prescription drug plan. The late enrollment penalty amount typically is around 1% of the “national base beneficiary premium for each full, uncovered month that the person didn’t have Part D or creditable coverage.” For 2019, the national base beneficiary premium is $33.19. The penalty is added to the monthly Part D premium.
To put it plainly, if you are already on a medication regimen of any kind – whether it is a single daily prescription drug or multiple medications – the Medicare Part D Prescription Drug plan is going to help you pay for them, and it protects you from living with overly high drug costs. Obtaining help from Part D or a Part C coverage is something that the vast majority may want to pursue. This is why many states offer affordable Part D Prescription Drug plans that can help with costs in the present as well as in the future should health conditions or requirements change.
Part D is standardized prescription drug benefit, which means that there are laws that establish the minimum benefits or coverage. All plans will have a monthly premium, an annual deductible, a coinsurance that is either a copay or percentage and the “doughnut hole,” which is a percentage of costs in the coverage gap. Lastly there is catastrophic coverage that asks you to pay no more than 5% of the cost of the drug.
Ultimately, though, it is the drugs and plan selected that determine the premiums and the coverage.
Not all participants receive the same level of coverage, with some plans offering lower prices, better benefits, and even more coverage or less out of pocket expense. Those on limited incomes can quality and even obtain extra help.
There may be differences in plans, the variety of drugs available, copays, and even pharmacies used. Each prescription drug plan, however, uses a drug formulary and drug tier system that works in this way:
Tier 1 – Lowest copayment: most generic prescription drugs
Tier 2 – Preferred or brand-name prescription drugs for a medium copayment
Tier 3 – Brand names or non-preferred prescription drugs for a higher copayment
Tier 4 – Also called the Specialty Tier – Very high cost prescription drugs for the highest copayment
There are some plans with four or more tiers, and some at the other end charging the same price for all drugs. The reason that a plan may charge more for one medication than another plan is simply that they negotiate directly with the manufacturer in an effort to get the best pricing, and some achieve better results, passing them on to those in the plans. Additionally, some plans put similar medications in different tiers, causing a change in fees.
When shopping for Part D insurers, it may be best to take the time to identify the costs associated with the prescription drugs you use the most and make your choices based (in part) on that data.
Consider to also explore if the plan covers all of the prescription drugs you require. After all, you may be able to get all that you require, but keep in mind that there is no guarantee as each plan can vary in cost and drugs covered.
Medicare Prescriptions Drug Plans are required by law to have at least two drugs within each class used to treat a similar condition. These prescription drug plans are also required to include on their formularies all drugs in the following six categories or classes (except in limited circumstances):
There are, naturally, some exclusions. Among them are drugs used for cosmetic purposes, those for fertility, erectile dysfunction medications, and weight control drugs which are not required to be included in the plans. Many OTC or over the counter drugs and a list of anti-anxiety medications are left out (including Valium and Xanax).
The individual plans can change their formularies but must inform participants at least 60 days ahead of the changes, unless a drug had been withdrawn due to safety issues. There are other limitations, for example, a plan may use “step therapy” that requires you use the generic or lower-tier medication before moving up to the costliest tier. This saves both the plan and the individual a great deal of money.
There may also be quantity limits imposed which restrict you to a certain number of prescriptions of a specific medication per year, and this is usually capped at the dosage or quantity that is determined to be necessary to treat your specific condition. Waivers are possible but require doctor statements and authorization from the plan.
Who is Eligible for Drug Coverage – What is Medicare Part D Meant to Do?
Eligibility for Medicare Part D is broad and anyone with Part A or B enrollment is entitled to access to Part D, regardless of their income. There are no physical exams and applicants cannot be denied for any reason, even if already utilizing a long list of medications.
The program is voluntary, and you must obtain the medications from another underwritten program, such as Medicaid, you will need to use Medicare upon enrollment. And as we already noted, it is important to enroll in the program as soon as you become eligible in order to get the very best premium. The longer one waits to enroll, the higher that penalty makes the monthly premium at a later time.
Enrollment is done during the IEP or initial enrollment period, the Open Enrollment Period or the SEP, the Special Enrollment Period. These periods are defined as follows:
You must also live in the service area of the Plan and participate in Medicare Part A or B. Typically, the Part D IEP is identical to the Medicare IEP, and coverage varies based on when you enroll. Enrollments during the first three months of your IEP means coverage starts on the first day of the fourth month. Enrollments during that fourth month of the IEP (or any three months after) mean coverage begins the month after that month of enrollment. Remember that penalties accrue for delays, and the sooner you enroll, the lower your rate.
There is no universal rate for the coverage because each private plan sets the premium, though the Part C plans have no additional premiums for coverage. What does alter the amount you will pay is your income. Those who opt to purchase Part D drug coverage in addition to their Medicare plan will have a higher price for Part D coverage when they earn more than $85,000. They pay a surcharge on their Part B premiums and will pay a Part D surcharge directly to Medicare.
Life-changing events allow anyone to apply for Part B and Part D surcharge removal, and this works both ways, qualifying if you suffer a loss of income as well as a spike in earnings.
Medications must be obtained from in-network pharmacies, with some exceptions made for unusual circumstances. If you go outside of the network it costs far more and may even be the full price of the drug.
Sometimes, Medicare Part B pays for drugs, which are typically drugs administered exclusively at the doctor’s office or a hospital. There are times when either the Part B or Part D coverage applies equally, and it is not unusual for Part D doctor to verify the matter and determine which pays. Part B, if you recall, is Medicare coverage focused specifically on medical care (not hospitalization, which is the Part A plan).
You can also consider a Part C or Medicare Advanced Plan. This is not a plan administered by Medicare but is instead a program you purchase from a private insurance firm. It combines Parts A, B, and D along with some added services. It can help to control costs and keep out of pocket to a low level. If the idea of managing multiple insurance plans confuses you, and you want a streamlined method for addressing hospital, medical, and drug costs, a Medicare Part C option can work well.
Millions of people opt to use the Part D as an add-on to Original Medicare, and it always pays to shop around and compare the costs of different plans and your needs. Ultimately, the answer to the question of what is Medicare Part D is that it might be a good addition to your Medicare coverage, and you now have the information to figure it out.
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