Medicare Part D
Medicare Part D is prescription drug coverage. You get 2 options for coverage.
- Option 1 is to enroll in a stand alone policy to cover drug costs
- Option 2 is to enroll in a MAPD
Regardless of the option you choose, each year you should look into your carrier and plan and double check your prescriptions for the following year.
Just because something was covered in the previous year, does not mean it will be the same next year.
If you have a MAPD, it is worth noting that your prescription drug costs will not go towards your Max Out of Pocket limit.
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The 4 Phases of Part D
Phase 1- Annual Deductible
- You pay the full cost of your prescriptions until your spending adds up to the amount of your deductible. So, if your plan has a $0 deductible, you skip straight to the next stage.
Phase 2- Initial Coverage
- Your plan pays for a portion of each prescription drug you purchase, as long as that medication is covered under the plan’s formulary (list of covered drugs). You pay the other portion. Which is called either copayment or coinsurance, it just depends on your plan. This stage ends once you hit Medicare’s limit for 2022, which $4430.
Phase 3- Coverage Gap (Donut Hole)
- Not everyone will enter the Donut Hole. Most people actually will not. But if you do, then you will be responsible for paying 25% of cost until you spend $7050 total out of pocket cost on prescription drugs.
Phase 4- Catastrophic Coverage
- After your out-of-pocket cost totals $7,050, you exit the gap and get catastrophic coverage. In the catastrophic stage, you will pay a low coinsurance or copayment amount (which is set by Medicare). About 95% is covered by Uncle Sam at that point.
Most people with Medicare prescription drug coverage will remain in phase 2 for the year. Meaning they will not spend more than $4430 on prescriptions.
Other than that, there is not much more to really get into with Part D. You want to make sure your carrier and plan cover your prescriptions, and if they do not, then you need to weigh the out of pocket costs versus switching plans.
In addition there are also other discounted options for prescriptions such as GoodRx.com
