Medicare Part D

Prescription drug coverage

Medicare Part D helps with the cost of prescription drugs.

You can get drug coverage with a standalone Part D plan or as part of a Medicare Advantage plan (Part C). Some plans have pharmacy networks and mail order pharmacies that offer discounted prices.

Plans are offered by private insurance companies approved by Medicare. Your choices vary depending on where you live. Coverage and costs beyond the standards set by Medicare vary from plan to plan.

You must be enrolled in Part A or Part B to be eligible for a Part D plan.

Medicare Part D plans cover:

  • Types of drugs most commonly prescribed according to federal standards
  • Specific brand name and generic drugs on the plan formulary, or list of drugs
  • Commercially available vaccines not covered by Part B

Coverage stages

Medicare Part D coverage has four stages. You pay a share of the cost for your drugs in each stage up to a limit. You may not reach all stages. The cycle restarts each year.

  • Annual deductible: You pay 100% of the cost up to the plan deductible amount.
  • Initial coverage: You pay copay’s or coinsurance up to a set annual limit.
  • Coverage gap (donut hole): You pay a percentage of the cost up to an
    out-of-pocket annual limit.
  • These annual limits are subject to change every year.
  • Catastrophic coverage: You pay reduced copay’s for the rest of the year.

Medicare Part D costs in 2020 Premium

  • Plan premiums vary widely and can change from year to year.
  • You may pay a premium penalty if you are late to enroll in Part D.
  • Many Part C plans include drug coverage.

Deductible

  • Deductibles vary per calendar year
  • The maximum deductible in 2020 is $435.
  • Not all plans have a deductible.
  • Plans may apply separate deductibles for drugs in different tiers.

Copay

  • Plans may charge copays for prescriptions and refills. Amounts vary.

Coinsurance

  • Some plans may set coinsurance rates for certain drugs or drug tiers.
  • In 2020, you pay 25% of the cost for both brand name and generic drugs.

Part D may charge a premium penalty if you don’t sign up when you are first eligible, unless you qualify for a Special Enrollment Period.