What is Medicare Part D?
Medicare Part D is optional coverage for prescription drug costs. It is part of Medicare, but Part D Medicare is provided by private insurance companies and regulated by the government to work with your Medicare coverage. The base premium for Medicare Part D is $38 a month in 2022.
The 4 Stages of Medicare Part D Coverage in 2022
Medicare Part D drugs may change costs at different times during your coverage. Here are the four stages of Medicare Part D coverage:
Phase 1: This is the deductible phase, during which time you pay the full negotiated price for your prescription drugs. You will stay in this first phase until you meet your Medicare Part D deductible.
Deductibles may vary from one plan to another–and some plans do not have a deductible. In 2002, your deductible for Medicare Part D cannot be more than $480.
Phase 2: This is the initial coverage phase after you meet your deductible, when your plan will assist paying for your covered prescription drugs. Your time frame in this second phase will vary depending on your drug costs and your plan’s benefits. In 2022, most plans’ initial coverage phase ends after you have reached $4,430 in drug costs.
Phase 3: After your drug costs reach $4,430 (at least for most plans), you will enter the coverage gap phase or donut hole. During this phase, you are responsible for 25% of the cost of your drugs in addition to your copayment.
Phase 4: You enter the Medicare Part D catastrophic coverage phase when you reach $7,050 in your out-of-pocket drug costs. During this phase you pay lower copays for your covered drugs for the remainder of the year. Your out-of-pocket expenses may include:
●Your deductible.
●All payments made during Phase 2.
●All brand name drugs you paid full cost for during Phase 3.
●Payments made by others, including your family, charities, churches, or any other organization who pays your drug costs on your behalf, including the State Pharmaceutical ASsistant Programs,
AIDS Drug Assistance Programs, and the Indian Health Service.
You may not include the following costs to reach your $7,050 in out-of-pocket expenses in Phase 4:
●Monthly premiums
●Payments towards drug costs, including non-covered drugs.
●The cost of covered drugs from pharmacies outside of your plan’s network.
●Your 75% generic discount.
You will pay 5% of the cost for each of your drugs (or whichever is greater: $3.95 for generic brands and $9.85 for brand names) during Phase 4.
Why should I get Medicare Part D?
Medicare Part D is optional, but the extra cost is often worth it because it covers prescription drugs. Without insurance, the average monthly cost of a brand-name Lipitor prescription is around $430 for 30, 10 mg tablets, while the cost for Cozaar oral tablet 50 mg is around $132 for a supply of 30 tablets, depending on the pharmacy you visit. {Prices are for cash-paying customers only and are not valid with insurance plans.) A generic version of Cozaar is available, as well, but these medications can quickly empty your bank account without insurance.
By enrolling for Medicare Part D before you need expensive prescriptions, you can avoid the late enrollment penalty.
What is the Medicare Part D late enrollment penalty?
The Medicare Part D late enrollment penalty is an additional fee added to your Medicare premium. If you don’t enroll in Part D during your Initial Enrollment Period or don’t have prescription drug coverage for more than 63 days in a row, you will have to pay extra if you enroll later. Medicare calculates the penalty by multiplying the 1% of the national base beneficiary premium times the months without coverage. Here’s an example:
Example of Part D Medicare Late Penalty
Margie enrolled in Medicare in July 2012, but didn’t include Part D. She didn’t have prescriptions at the time and didn’t think she needed coverage. Time passed and she needed a prescription to help her manage blood pressure. When Margie added Medicare Part D during open enrollment in 2021, Medicare added a late penalty to her premium. Since she had no prescription insurance from August 2017 to December 2021, she was charged an additional 41% of the 2022 base beneficiary premium ($33.37 times 41 %) as a penalty. So, Margie will have to pay an extra $13.70 for each monthly premium. The late penalty is permanent, so Margie will have to pay for it as long as she has prescription drug coverage under Medicare.
How do I get Part D Medicare?
If you are enrolled in Medicare Part A or Medicare Part B, you are eligible for Medicare Part D. You can add Medicare Part D as a standalone plan or combine it with a Medicare Advantage plan (Medicare Part C). In New Jersey, you have several choices for prescription coverage that goes beyond the minimum standards set by Medicare, including assistance from the State of New Jersey. To learn more about Part D Medicare in New Jersey, please call 1-800-792-9745 or visit the State of New Jersey Department of Human Services.
If you already have prescription drug coverage through an employer-based health care provider, COBRA, or TRICARE, you may want to delay enrolling in Part D. Medicare enrollment can be confusing. At The Sosa Insurance Group, we take the time to explain your options and guide you through the labyrinth of choices you need to make. Call 973-273-3767 or come to our local office at 450 Pleasant Valley Way in West Orange, NJ.
