Medicare Part D
Prescription Drug Coverage
What is Medicare Part D?
As we age, picking the best healthcare coverage, including prescription medication insurance like Medicare Part D, is crucial. It can also be challenging to choose and unclear to understand prescription drug plans in particular. The Healthpilot team cuts through the noise to help you find the best plan for your circumstances. This includes determining whether or not you even need Medicare Part D and, if so, which prescription drug plan best fits your needs.
Read on for a clear and simple explanation of Medicare Part D.
Medicare Part D is a prescription drug plan offered through private insurance carriers that is approved by Medicare and works with your Medicare Part A and B coverage. This prescription drug benefit provides coverage for outpatient prescription medications.
Maybe you haven’t heard of Medicare Part D until recently. It’s possible. These prescription drug plans have only been around since 2006, while Original Medicare has been around since the 1960s. Medicare Part D came about because there was a deficit in how the different Medicare programs covered prescription drugs. We know. We are Medicare nerds. We’ve accepted this.
It’s important to note that Medicare Part D is completely optional. Even so, most Medicare recipients opt for prescription drug coverage. If you take few or no prescription drugs, you might be debating whether it is worthwhile to enroll in Part D because you would be paying a premium to your plan while receiving nothing in return at the moment. While Medicare prescription drug coverage is a government benefit, it is actually insurance too, and like all other types of insurance, its purpose is to safeguard you from expensive prescription drug costs should you ever need it, now or later. Because of this, not to mention the possible late enrollment penalties you could incur, you may want to enroll in a Part D plan with the lowest premium, providing coverage for the lowest price.
More Parts of Medicare
Taking a step back, Medicare is a federal health insurance program for people that were traditionally underserved in the past. The Medicare program was created and is currently run by the U.S. government through The Centers for Medicare & Medicaid Services (CMS). Medicare services are divided up into four main parts – A, B, C, and D.
Click the links below to learn more about each of the parts of Medicare:
It’s likely you have also heard of the other parts of Medicare. To learn more about all of the different parts of Medicare, visit the Healthpilot Medicare Basics page.
Who is eligible for Medicare Part D?
Medicare Part D Eligibility
Medicare Part D keeps eligibility pretty simple. In general, to be eligible for Medicare Part D, you must fulfil both of the following requirements:
- Already signed up for Medicare Part A and/or Part B
- Live in a service area where private insurance companies offer a Medicare Part D plan
Original Medicare Eligibility
Since you have to be enrolled in Original Medicare first in order to qualify for Medicare Part D, we thought we would quickly include the basics of Medicare Part A and B eligibility.
If you receive Social Security benefits or the Railroad Retirement Board (RRB), then you have been or will be auto-enrolled into both Medicare Parts A and B upon the first day of your 65th birthday month. You will receive your red, white and blue Medicare card in the mail 3 months before your 65th birthday or the 25th month of receiving disability benefits. On the other hand, if you aren’t yet receiving your Social Security benefits, you will have to enroll actively in Medicare.
How do I sign up for Medicare?
While it is Medicare that covers you, you must sign up for it through Social Security Administration (SSA). This is because the SSA manages some eligibility requirements on behalf of Medicare. For example, they determine if you’ve been paying Medicare taxes long enough to get Part A for free, a.k.a. Premium-Free Part A. (They also take care of requests to join Medicare Part B.)
Signing up is easy. At Social Security, you can do it online. It’s the quickest and easiest way to sign up and get help if you need it. You can also call 1-800-772-1213 to talk to Social Security if you’d rather. (TTY: 1-800-325-0778).
If you or your spouse worked for a railroad, call the Railroad Retirement Board at 1-877-772-5772. (TTY: 312-751-4701)
You may apply for Medicare enrollment up to 3 months before you reach 65, during the month of your 65th birthday, and up to 3 months after that date. Still sounding a bit confusing? Take a peek at this simple graphic we made just for you.
Fairly straightforward, right? Initial eligibility and enrollment windows can feel like they rush by, so don’t be late. Set reminders on your phone or mark your calendar to avoid missing these enrollment windows.
Enrolling in a Prescription Drug Plan
Because Part D is completely optional, it is a good idea to consider enrolling in a Part D prescription drug plan even if you do not currently use any prescription medications.
The most important detail to keep top of mind is that if you have Medicare Part A or Part B and you don’t have any other creditable drug coverage (other coverage that is as good as Medicare Part D), you may be subject to a Late Enrollment Penalty (LEP) if you do not enroll when you are first eligible and have to pay drug expenses out of pocket.
The enrollment periods for Medicare plans are pretty strict and offer few exceptions, so if you delay enrollment in Part D for and find that you need drug coverage later, you may incur an ongoing Late Enrollment Penalty.
The Initial Enrollment Period (IEP)
The initial enrollment period (IEP) is when the majority of those interested in a Medicare plan can sign up. This spans the three months prior to and three months following your birth month. So if your birthday is September 9th, your IEP starts June 1st (see above graphic).
People who become eligible for Medicare due to a disability have an IEP that starts three months before their Medicare Part A and/or B becomes effective and lasts for seven months. People who are disabled and then turn 65 can get a second initial enrollment period (IEP2) that lasts 7-months.
Annual Enrollment Period (AEP)
AEP or Medicare’s Annual Enrollment Period is the official time when everyone who is eligible can add, modify, or discontinue their Medicare Part D plan or Medicare Advantage coverage for the upcoming year. That’s why it’s so important to have all your ducks in a row when it comes to knowing your eligibility and being prepared for enrollment. October 15 through December 7 is the one guaranteed opportunity during the year that you have to assess your own Medicare eligibility, evaluate plans and carriers, and ultimately choose, hopefully, the best Medicare plan for you.
There is, of course, a better way.
Let Healthpilot do all the work during AEP. In minutes, you will be able to figure out your eligibility, see our best Medicare plan recommendation for your needs, and enroll in your Medicare plan in minutes…not months.
What does Medicare Part D cover?
Simply put, Medicare Part D is insurance that provides coverage for your prescription drug needs. For your Part D plan, you pay a monthly premium to an insurance provider. In exchange, you buy your prescription drugs from pharmacies in the insurance company’s network. You may pay a copay, or a portion of the drug’s price as opposed to the whole amount. The remainder of the prescription drug cost is then covered by your insurance provider until you reach the coverage gap also often referred to as the “donut hole.”
Medicare Part D Donut Hole
The Part D “donut hole” is a really cute name for a coverage gap. It’s the portion of Medicare Part D coverage that comes after your initial coverage period. When your total drug costs, including what you and your plan have paid for your drugs, reach a certain limit, you fall into the “donut hole.”
Medicare Part D Formulary
Every Part D plan has a formulary or list of specific medications that are covered by the plan. You might need to ask for an exception, pay out of pocket, or submit an appeal to your insurer if your medication isn’t listed on your plan’s formulary.
A drug category, which is different than a plan formulary, is a collection of medications that treat the same symptoms or have comparable physiological effects. All Part D plans must cover all drugs available in the following categories (also known as Protected Classes) and must include at least two medications from most categories:
- Anticancer (unless otherwise covered by Part B)
- Anticonvulsive treatments
- HIV/AIDS treatments
What does Medicare Part D not cover?
There are some drugs that insurance companies may not offer to their customers because the drugs are not mandated by Medicare. These medication types are called “excluded drugs.” Medicare Part D plans may choose to include coverage for these medications as an added benefit. Excluded drugs include barbiturates, medications for cosmetic purposes or hair growth, prescription-strength cough and cold medicines, prescription-strength vitamins and minerals, over the counter (OTC) drugs, or weight modification medications and more.
Speak with your doctor to find cost effective alternative medications on the plan’s formulary in these scenarios. If your medication is not included in the plan formulary you can request that the plan cover the medication by submitting an exception request. Be aware that not all exceptions may be approved, so you might have to pay for any medications that aren’t covered by your plan or by Part D as an out-of-pocket expense. If you don’t agree with your plan’s decision about whether or not to cover a drug, you have the right to file an appeal.
Drug Utilization Rules
For safety reasons or cost-effectiveness (for both you and the insurance company), Medicare allows insurance companies to apply rules to Medicare Part D covered medications. Remember, you have the right to request an exception on any of the below rules with the insurance company. The most common of these drug utilization rules are:
Quantity Limits – This is a restriction on how much of the medication quantity you can get over time (Ex: 60 tablets per 30 days) or have at one time (Ex: 1 tablet per 30 days).
Prior Authorization – Before dispensing your prescription, you or your doctor must get plan approval. Before approving a prescription, the insurance company may require information demonstrating medical necessity from your doctor.
Step Therapy – Before prescribing a more expensive prescription, your doctor must first explore less expensive alternatives within the same drug category. You and your insurance company save money if the alternative drug works. If not, your doctor must assist you in filing a drug exception request for coverage of the original medication prescribed. Your doctor must explain why you need the expensive drug when cheaper ones are accessible. They must also show that you’ve tried less expensive choices without success.
You can check your medications against your plan’s formulary for restrictions to any of your important prescriptions to prevent any unforeseen Medicare prescription costs. Your best bet? Use Healthpilot. Healthpilot will not only help you evaluate your eligibility to avoid stress, but we also evaluate which Medicare Part D plan is right for you based on the current medications that you are taking. We then give you a break-down of how the plan will cover your mediations through all the phases so you can fully understand the estimated costs. Once you are ready, you can complete your enrollment into the Part D plan in minutes on our site. Save yourself the trouble and check out your recommended plan now.
What is the cost for Medicare Part D?
Medicare Part D deductibles
Medicare Part D prescription drug coverage can cause confusion, and much of that starts with the deductible. Medicare sets the standard annual deductible every year. But because Part D coverage is provided by a private insurance carrier, it is up to that carrier to determine the amount of the deductible with Medicare’s approval. It could be nothing, it just cannot exceed the standard deductible set by Medicare that year.
Insurance companies group and price medications according to a Tier program. Your insurance company also gets to decide how many tiers they will use, but most Part D prescription medication plans have five tiers that guide how the insurance companies assign pricing. Tier 1 medications are the most cost-effective, low to no copays, while Tier 5 are generally the most expensive. Each carrier’s formulary will provide a medications Tier level and copay.
The Inflation Reduction Act and your Prescription Drug Coverage
There’s not often exciting news to share about Medicare, yet recent legislation is, in fact, good news.
The Inflation Reduction Act of 2022, comprised of a comprehensive set of health, tax, and climate change legislation, was signed into law by President Biden on August 16, 2022. The law has several features that will lower Medicare beneficiaries’ prescription drug expenses and reduce federal medication spending. Two measures in the Inflation Reduction Act intend to have an immediate effect on drug prices:
- The federal government must bargain for the cost of some expensive medications covered by Medicare.
- Pharmaceutical companies must give Medicare rebates if their prices for medications used by Medicare beneficiaries rise faster than the inflation rate.
The Medicare Part D benefit’s out-of-pocket spending for beneficiaries of Medicare will be capped under a number of provisions in the Inflation Reduction Act, first by eliminating coinsurance beyond the catastrophic threshold in 2024 and then by introducing a $2,000 cap on spending in 2025.
However, the big news you have undoubtedly been hearing the most about is that starting in 2023, the Federal Government will cap the Medicare cost-sharing for insulin at $35 per month under the Inflation Reduction Act. The Inflation Reduction Act also eliminated the cost sharing for adult vaccines. This means that starting in 2023, you will be able to get vaccines at no cost to you.
Ready to decide if you need a Medicare D plan?
It’s a big decision, right? Maybe not. Most people in-the-know do not advise skipping Part D. Why take the chance when private insurance companies offer Part D policies that are very cost-efficient in most service areas? Since Part D is insurance, bear in mind that it covers more than simply the prescriptions you are currently taking, if any. It may cover any prescriptions that your doctor could prescribe in the future.
Let us help find your prescription drug coverage.
Did you really make it to the end of this page? Glad you’re still with us because it’s time to let Healthpilot do all of the work for you. Just answer a few questions regarding your prescriptions and pharmacies.
You will then receive an unbiased, reliable Medicare plan recommendation from Healthpilot’s algorithm. Then, easily enroll online (did we mention the Healthpilot enrollment process takes less time than it takes the average person to do their dishes?)
To make sure your plan suits your needs and saves you time and money every year, we take into account changes to insurance plans and your profile. The best part is that we continue to do this for you every year for the rest of your life. Stick with us kid, and we will make your enrolling in a Medicare plan a breeze.