Key Takeaways
- 1Part D covers prescription medications through standalone plans or Medicare Advantage
- 2Each plan has a formulary listing covered drugs and their costs
- 3Coverage progresses through four phases throughout the year
- 4Comparing plans based on your specific medications is essential
Medicare Part D provides prescription drug coverage that can significantly reduce your medication costs. Understanding how Part D works helps you choose a plan that covers your prescriptions at the lowest possible cost.
How Part D Coverage Works
Part D coverage is provided through private insurance companies approved by Medicare. You can get Part D through a standalone Prescription Drug Plan (PDP) that works with Original Medicare, or through a Medicare Advantage plan that includes drug coverage.
Understanding the Four Coverage Phases
Part D coverage progresses through four phases as your drug spending increases throughout the year. Understanding these phases helps you anticipate your costs.
Part D Coverage Phases
Deductible
Pay full cost until met
You pay the full cost of your drugs until you reach the annual deductible (if your plan has one).
Initial Coverage
You pay copays/coinsurance
After the deductible, you pay a copay or coinsurance and your plan pays the rest.
Coverage Gap
Previously "Donut Hole"
After total drug costs reach a certain amount, you may pay a reduced cost for drugs.
Catastrophic Coverage
Maximum protection
After your out-of-pocket costs reach a limit, you pay a small amount for covered drugs.
Amounts change annually. Visit Medicare.gov for current limits.
- Deductible Phase: You pay full cost until meeting the annual deductible
- Initial Coverage Phase: You pay copays or coinsurance while the plan pays its share
- Coverage Gap (Donut Hole): You pay a reduced percentage of drug costs
- Catastrophic Coverage: You pay minimal costs after reaching the out-of-pocket threshold
Choosing the Right Plan for Your Medications
The key to choosing the right Part D plan is ensuring your medications are covered at reasonable costs. When comparing plans, consider the plan's formulary, your preferred pharmacy, the total estimated annual cost, and the plan's star rating.
Check the Formulary
Each plan's formulary lists covered medications and their tier placement. Make sure all your current prescriptions are covered, and check which tier they're on to understand your cost-sharing.
Consider Your Pharmacies
Many plans offer lower costs at preferred pharmacies. Check if your local New Jersey pharmacies are in the plan's preferred network to potentially reduce your costs.
Extra Help for Low-Income Beneficiaries
If you have limited income and resources, you may qualify for Extra Help (also called the Low Income Subsidy). This program can significantly reduce your Part D costs, including premiums, deductibles, and copays.
