For many seniors, managing the cost of prescription drugs is near the top of the list when it comes to their health care needs. Original Medicare doesn’t cover medications outside of those given while you’re at the doctor’s office or during a hospital stay. Because of this, many Medicare recipients opt for additional prescription drug coverage.
Medicare Part D is the part of Medicare that provides prescription drug coverage, and it’s available in two ways:
You can sign up for Part D coverage as soon as you’re eligible for Original Medicare under your Initial Enrollment Period (IEP). You must enroll in Parts A and B before Part D.
Besides your IEP, your other opportunities to enroll in or switch Part D coverage are during your:
During Medicare’s Annual Enrollment Period (AEP), you can enroll in Part D coverage for the first time or switch to a different plan. Coverage can be through a Medicare Advantage, Cost or stand-alone Part D plan.
During this period, you can also drop your current plan and go back to Original Medicare. If you go back to Original Medicare or switch to a Medicare Cost plan without Part D, you can enroll in a stand-alone Part D plan. Coverage from any new plan starts on January 1 of the next year.
If you’re enrolled in a Medicare Advantage plan with or without Part D coverage, you have an opportunity to change plans during this period each year.
Just like during the AEP, you can switch to a different Medicare Advantage or Cost plan or go back to Original Medicare. If you go back to Original Medicare or switch to a Medicare Cost plan without Part D, you can enroll in a stand-alone Part D plan.
After certain events, such as moving outside your current plan’s service area or losing your current Medicare plan, you may have a two-month SEP to enroll in a Medicare Advantage or Part D plan.
You’re not required to have Part D coverage. But keep in mind that if you enroll in Part D after the first time you’re eligible (your IEP), you may have a late-enrollment penalty. This penalty is added to your Part D premium and usually lasts for as long as you have Medicare drug coverage.
However, you won’t be charged a late-enrollment penalty if:
- You have other creditable prescription drug coverage (such as from an employer or union) before you enroll in Part D, OR
- You get support from the Medicare Extra Help program
Part D coverage varies for different types of prescription drugs, which are grouped into tiers. In general, drugs in lower tiers have lower costs, and drugs in higher tiers have higher costs.
- Tier 1: Preferred generic drugs
- Tier 2: Generic drugs
- Tier 3: Preferred brand drugs and select insulin drugs
- Tier 4: Non-preferred drugs
- Tier 5: Specialty drugs
Part D has four stages of coverage, and you pay a different amount for your prescriptions in each stage. The coverage cycle begins on January 1 of each year.
The cost of the prescription drugs you use will determine the number of stages you’ll reach throughout the year. It’s important to understand how the coverage stages work so you’re prepared for any changing costs.
In this stage, you pay 100% of your prescription drug costs until you meet your plan’s annual prescription deductible. Some plans call this the pharmacy deductible or prescription drug deductible.
With some plans, the deductible applies only to certain drug tiers. For example, a plan’s deductible may apply only to drugs from Tiers 3 to 5. This means the plan will cover any drugs you take from Tiers 1 and 2 right away.
Keep in mind that if you get Part D coverage through a Medicare Advantage plan, it will have its own deductible separate from the medical portion of the plan.
After you meet your prescription deductible, if you have one, the initial coverage stage begins. If you don’t have a prescription deductible, you start in this stage right away.
In the initial coverage stage:
- The plan covers some costs for covered prescription drugs in all tiers
- You usually pay a copay or coinsurance amount for each covered prescription you fill
The initial coverage stage ends when the total amount spent by you and your plan on your covered drugs (including any deductible but not including monthly premiums) equals the initial coverage limit set by Medicare. In 2022 that limit is $4,430.
If your total drug costs go over the initial coverage limit, you’ll enter the coverage gap, sometimes called the donut hole.
Many people never enter the coverage gap, but if you do, you’ll pay:
- 25% of the plan’s cost for all covered generic drugs
- Up to 25% of the plan’s cost for all covered brand drugs
Some plans offer additional coverage during the coverage gap, so check your plan’s benefit documents to see the exact coverage.
If you take any covered brand-name drugs, the manufacturer discounts the price during the gap. The amount of this discount (70%) also counts toward your out-of-pocket costs, helping you leave the coverage gap sooner. You leave the coverage gap when your total out-of-pocket costs for covered drugs (including any deductible but not including premiums) reach $7,050.
If you get support through the Medicare Extra Help program, you won’t have a coverage gap.
When you exit the coverage gap, you’ll be in the catastrophic coverage stage, which will last through the rest of the calendar year. During this stage, you pay a small copay or coinsurance amount that’s set by Medicare.
On January 1, the coverage stages start over with the annual deductible or, if you don’t have a prescription deductible, at the initial coverage stage.
All of our Medicare Advantage plans include Part D coverage, providing the added convenience of having all your coverage in one plan. Members can expect benefits like:
- Fewer phone calls: You’ll have one number for all your questions. With two separate plans, you’d have to call one number with your medical questions and another number about your medications.
- One member ID card: Along with one member ID number, one card helps keep things simple.
- Knowing your medications: A combined plan can help you manage your medications and make sure you get the most benefit from them through the medication therapy management (MTM) program.
A HealthPartners Medicare Advantage plan gives you access to a network of more than 63,000 pharmacies nationwide.
Look up drugs in our HealthPartners Medicare Advantage plans’ drug lists, see answers to FAQs and more.
Last updated October 2021
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