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What is Medicare Part D?

When looking to buy a Medicare plan, it’s important to understand how Part D works. Part D is your prescription drug coverage. It’s available to everyone with Parts A and/or B, but it’s only offered through private health insurance plans, so you’ll have to enroll in it separately.

Get started by signing up for Medicare Parts A and B through your local Social Security Administration office. You can sign up for a Part D plan with a private health insurer.

HealthPartners offers Part D coverage with most of our plans. With the HealthPartners Journey (PPO) plan and HealthPartners Robin (PPO) plan, you’ll get medical and prescription coverage together in one plan. You won’t need to add a separate Part D plan.

You don’t have to sign up for Part D, but it’s a good idea to do it when you are first eligible. If you go too long without Part D or other drug coverage that is as good as what is required by Medicare, you could face a late enrollment penalty.

The four stages of Medicare Part D

Knowing how much coverage you’re getting under Medicare Part D can be confusing. To make things clearer, imagine it’s kind of like a board game. There are four Part D stages, and you’ll move through each stage during the year like you would move through the squares on a game board. Usually, around January 1st, the game starts over no matter where you were on the board.

Here are the stages:

1. Deductible stage

You’ll start with the deductible stage. Most Medicare Part D plans have a deductible. That means there’s a certain amount of money you have to pay before the plan kicks in. You’ll pay 100 percent of your prescription costs until you meet your deductible.

2. Initial coverage stage

Once you’ve met your deductible, you move into the initial coverage stage. In this stage, your plan helps cover your prescription costs. You typically pay a copay, which is a set amount of money, or coinsurance, which is a certain percentage of the cost.

Drug tiers tell you what you’ll pay for different kinds of medicine on your Medicare Part D drug list. Medicine in lower tiers will cost less than medicine in higher tiers. Here’s how our Medicare Advantage tiers work:

  • Tier 1: Preferred generic drugs
  • Tier 2: Generic drugs
  • Tier 3: Preferred brand drugs
  • Tier 4: Non-preferred drugs
  • Tier 5: Specialty drugs

People with limited incomes may qualify for extra help to pay their prescription drug costs. Medicare’s Extra Help program helps cover the cost of prescription drug coverage – like monthly premiums, annual deductibles and prescription costs.

3. Coverage gap stage

You only move on to the coverage gap stage – also known as the “donut hole” – if you and your plan have spent a certain amount on covered medicine. This amount may change from year to year. It’s important to keep track of your prescription spending, so you’re not surprised when you hit the coverage gap.

During the coverage gap stage, you’re responsible for 100 percent of your prescription costs. You’ll pay a certain percentage for brand-name drugs and another percentage for generics. Some plans offer additional coverage during the gap, which may help to save you money. Be sure to check whether your plan offers additional coverage during the gap.

4. Catastrophic coverage stage

You leave the coverage gap and enter the catastrophic stage if you’ve spent a certain amount of money for covered medicine. This is called your “year-to-date out-of-pocket costs.” Like before, the number changes each year. People who use high-priced medicine, like injectable or rare drugs, are more likely to reach this stage. Here, you’ll either pay a coinsurance or a set copay, whichever is greater.

Watch a video on the four stages of Part D

How to get more information on Medicare Part D

We have a lot more information about Medicare Part D on our website, including Medicare drug coverage blog posts, transitional medication policy info and a Drug List FAQ that answer some common questions. You’re also welcome to call Member Services with your Medicare Part D questions.

Last updated October 2019

H2422_118314 Approved

H2462 H4882_118314 Accepted

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