Medicare Part D Explained | How To Get The Best
Hi, Chris Duncan here again. Welcome back to the Medicare basics blog series. This is the last blog in this four part blog series. I am ending with Part D Prescription drug plans. Medicare Part D Explained can be extremely confusing that’s for sure. I hope to put away a little bit of that confusion with this blog.
Part D is a partnership between Medicare and private Insurance companies. There are usually about 30 plans available to choose from in each state. They’re administered by private insurance companies. If you want to get Part D of Medicare then you need to get it from a private insurance company. All the plans are different. We help our clients pick and enroll in the Part D plan that is right for them.
Medicare Part D Explained | Late Enrollment Penalty
Many people that are new to Medicare want to know about the late enrollment penalty for Part D and how it may apply to them. The late enrollment penalty happens when you don’t enroll in a Part D plan when you are first eligible. Now there are a few situations that allow you to avoid this penalty. Most common is if you don’t enroll in a Part D plan because you have group or employer coverage. If you enroll in a Part D plan after you lose that group coverage, you will not incur that penalty.
It’s important to know that you have 63 days to enroll in a Part D plan after the loss of group health coverage and not incur the penalty. If you do incur a late enrollment penalty it stays with you the entire time you have a Medicare Part D Plan. This also includes if you get a Medicare Advantage Plan that has Part D coverage included. Even if it’s a $0 premium Medicare Advantage Prescription Drug Plan.
When Can You Enroll in Medicare Part D
You can enroll in Part D during your Initial Enrollment Period. This lasts 7 months and usually is around your 65th birthday. It lasts 3 months before your birthday month, the month of your birthday, and 3 months after your birthday month. If you try to enroll in Part D after this time and don’t have a special election or circumstance you are locked out of Part D until the next Medicare Annual Enrollment Period that lasts from October 15 to December 7.
Reasons You Should be Talking About Enrolling in Medicare Plan D Explained
Some people ask that don’t want to get a Part D plan in their Initial Enrollment Period what will happen if they want to get one at a later date. Let’s say you turned 65 in February and didn’t want to get a Part D plan for whatever reason. Then in July, something happened and you want to get a Part D plan. Maybe something happened and you have prescribed an expensive medication.
You are locked out and you can’t enroll unless you have a special election. You’ll have to wait for the Medicare Annual Enrollment Period from October 15 to December 7 and then the plan will become effective on January first of the next year. And because you didn’t enroll during your initial enrollment time and didn’t have a special election you will also have to pay the late enrollment penalty and that will last the entire time you have a Part D plan.
Amazing Ways On How I Help People Pick The Right Medicare Part D Explained
There are a lot of confusing levels, like deductible, initial coverage level, coverage gap, and catastrophic coverage. If you’d like to learn more about those specifics I’ve made a blog about that and you can also go to medicare’s website. I’ve provided links to help guide you to those resources. Like I said with this blog I want to illustrate how I help my clients find the right Part D plan. Part D can be complicated, but finding the right plan is not if you use the right tools. And you can use the same tools I do. I use Medicare’s plan finder tool and I also use my website tool at www.PartDnow.com. Here’s how I do this and remember this is a service I provide to my clients for free.
- First I need a list of the prescriptions you take.
- I also need the dosage of the prescription, which is usually the milligrams or micrograms. If it’s an eye drop solution please specify the size of the bottle.
- Next, I need to know how many times a day you take the prescription and last the pharmacy you prefer to use. Most Part D plans have preferred pharmacies and using a preferred pharmacy can add up to substantial savings. When I enter this information into the plan finder system it sorts out the plans available to you in your local area by total cost.
Wrong Way to Pick a Part D Plan
One of the most common mistakes people make when purchasing a Part D plan on their own is by choosing a plan by premium alone. What can happen is you can pick a plan that doesn’t cover all of your prescriptions very easily. The reason we get that list of prescriptions from you is to make sure the plan we recommend to you first covers all of your prescriptions. Then we’re able to look at all of the costs. This includes the premium, deductible, if there’s one, and what prescriptions the deductible applies to, your copays at the pharmacy, whether you enter the coverage gap more commonly the donut hole and if you do how much your prescriptions will cost. We’re able to look at all of the costs and recommend a plan that will have the lowest overall costs. Not just the lowest premium.
Different levels of Part D Plans
All the plans can have different premiums; they usually range from about $8 per month to up to about $150 per month. What I’ll talk about here are the minimum benchmarks or levels each plan must-have. There are four levels in the Part D plans, deductible, initial coverage level, coverage gap, catastrophic coverage.
- We will start with the deductible. The maximum deductible in 2021 is $445. That means the highest deductible a plan can have is $445. Plans can certainly offer a lower deductible, but the maximum in 2021 is $445.
- Next, is the initial coverage level. The initial coverage level for 2021 is $4,130. This level is how much coverage you have until you enter the coverage gap also known as the donut hole. When you have met the threshold of the initial coverage level, generally speaking, your cost goes up. This is how Part D figures the Initial Coverage Level. What happens is the cost of how much you pay for a prescription is added to how much the insurance company pays for your prescription. Here’s an example: Let’s say your copay is $10 for the prescription and the insurance company’s share is $90. These two numbers are added together. Obviously this totals $100. This $100 is subtracted from the $4,130. After that prescription has been filled the remaining ICL left is $4,030. This number decreases for each prescription filled. If you and the insurance company never pay a total of $4,130 for the entire calendar year, you never reach the next level which is the coverage gap.
Coverage Gap | Donut Hole
- Here’s how the coverage gap works. → from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/costs-in-the-coverage-gap Once you reach the coverage gap, you’ll pay no more than 25% of the cost for your plan’s covered brand-name prescription drugs. You’ll pay this discounted rate if you buy your prescriptions at a pharmacy or order them through the mail. Some plans may offer you even lower costs in the coverage gap. The discount will come off of the price that your plan has set with the pharmacy for that specific drug. So that means their negotiated cost.
This next part is important if you are in the coverage gap. This is how the costs are calculated to move you out of the coverage gap into the last phase which is called the catastrophic phase. Although you’ll pay no more than 25% of the price for the brand-name drug, almost the full price of the drug will count as out-of-pocket costs to help you get out of the coverage gap. This is what you pay and what the manufacturer pays (95% of the cost of the drug) will count toward your out-out-pocket spending.
Some Ways Generic Drugs in the Coverage Gaps are Cooler than Michael Jordan (Hey Part D Can be Boring. We Can Have a Little Fun with a Headline Can’t We)
Medicare will pay 75% of the price for generic drugs during the coverage gap. You’ll pay the remaining 25% of the price. The coverage for generic drugs works differently from the discount for brand-name drugs. How the costs are calculated to move you through the coverage gap to the catastrophic phase are calculated differently than how brand name drugs are calculated. For generic drugs, only the amount YOU PAY will count toward getting you out of the coverage gap. Part D enrollees will receive a 75% discount on their brand-name drugs.
This discount includes 70% paid by the drug manufacturer and 5% by Medicare. The maximum amount the Part D beneficiary can pay for a brand-name drug is 25% of the plan’s cost for the drug. The 25% the Part D enrollee pays and 70% by the manufacturer count towards the True Out of Pocket Cost. The 5% Medicare pays does not count towards the True Out of Pocket Cost. Again, that is the maximum. Some plans may have lower costs. The maximum amount the Part D beneficiary can pay for a generic drug in the coverage gap is 25%. Medicare pays the remaining 75%. It’s important to note that only what you pay for generic drugs while in the coverage gap count towards the out-of-pocket costs.
Drugs costs can decrease in the Coverage Gap (Donut Hole) But don’t count on it.
Generally speaking, your cost will go up during the coverage gap, but when doing research for our clients’ Part D plans, on occasion we find some drugs go down during the coverage gap as compared to the Initial Election Period.
When the Coverage Gap Ends
How do you get out of the coverage gap? This part certainly gets more confusing. It’s important to note the premiums do not count towards any of the levels. $6,550 is the mark in 2021 for what is called True Out of Pocket Cost. Once you have paid a total of $6,550 in deductible, copays, and coinsurance you move out of the Coverage Gap and into the Catastrophic Phase.
Last level is called the Catastrophic Phase and it is easy to understand. Beneficiaries who receive generic prescriptions will pay $3.60 for generic prescriptions under $72 and 5% for prescriptions over $72. Brand name drugs will cost the beneficiaries $8.95 for drugs under $79 and 5% for drugs over $79. There are no other levels beyond catastrophic coverage so once you hit this level you stay here until December 31st. And this all starts over again on January 1. And the benchmarks change every year.
Conclusion
I’m sure this is probably confusing,but we’re able to do all of the research and shopping for you. We’re able to compare all of the plans available to find a plan that is advisable for you. Many people when shopping on their own might pick a plan solely based on the monthly premium. They don’t take into account all of the different levels of the Part D Plan. Besides, not all plans have to cover your exact prescription list. It’s easy to buy a plan if you don’t do the necessary research that only covers for example four of the five prescriptions you take.
When you go to the pharmacy you find out one of your prescriptions isn’t covered and you are paying full price for the prescriptions which could be $100’s of dollars potentially. We offer free help for all of our clients when searching for a Part D plan. It’s easy for us to search. All we need is the name of the prescription you take, dosage, generally that is how many milligrams you take, how many times a day you take it and also the preferred pharmacy you like to use. When we have that information we can go to work for you. As always remember all of our services are free to you.
I am Chris Duncan your expert Medicare Advisor 800–910–3382.
If you have a question about this or anything else, I am here to help. I assist with Medicare Supplements, Medicare Advantage, Part D prescription plans, dental vision hearing plans, final expense life insurance also called burial insurance, cancer insurance, protecting retirement savings, and more. If you would like my help it’s easy to contact me at 800–910–3382. I look forward to seeing you on my next blog.
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