Medicare Basics: Part D

Medicare Prescription Drug Coverage

• Offered by private insurance companies with an approved Medicare contract

• Purchased in addition to Parts A and/or B benefits (unless it is included with your Part C Medicare Advantage plan)

• Helps lower your prescription drug costs and helps protect against higher costs in the future

Part D plan have an annual deductible and in 2021 it is $445 a year. Some stand-alone Part D plans and Part C plans will cover this deductible so that your coverage starts from the very first dollar.

Additionally, all Part D plans have a formulary. A formulary is a list of drugs the plan will cover. If a drug isn't on the formulary you would pay the factory cost of that medication with no help from your plan. You can go to www.medicare.gov to see which plans cover the medications you are taking or have one of our knowledgeable agents do it for you.  

There are three coverage stages for all part D plans:

1. Initial Coverage Period - in this stage you'll have a set copay for your medications from Tier 1 all the way up to Tier 6. Tier 1 would be the cheapest of the tiers.

2. Coverage Gap - this stage, also known as the 'donut hole', is where you'll have to pay a percentage of the cost of your medication instead of a set copay. For 2021, once you and your plan have paid $4,130, you'll pay 25% of all generic drugs and 25% of brand-name medications.

3. Catastrophic - Once you've spent $6,550 in 2021, you're out of the coverage gap and you'll pay no more than 5% for any drug.

Part D considerations:

No two Part D plans are alike. One company can classify a common generic drug like Lisinopril as a Tier 1 and another company can have it as a Tier 2 making it more expensive with the second carrier. Not only that, the first carrier may charge $5 for Tier 2 medications while the second company will charge $20 for Tier 2 and these classifications and formularies can change from year to year. That is why every one of Insurance Forecast Center's clients gets a phone call and a letter during the Annual Open Enrollment to do a Medicare drug plan review. 

For the most up-to-date information on Medicare please schedule a strictly educational, no-cost consultation using the link below. You’ll speak with a Medicare advisor who is knowledgeable on all plans.