Medicare can help you pay for prescription drugs in two ways.
Even though many seniors rely on medicines for their health, you won’t find outpatient coverage in Medicare Part A and Part B. Part D is an optional program that covers prescription drug costs. Medicare started offering it in 2006 as an option.
Prescription drug plans are offered by private insurers approved by Medicare. Most recipients will pay a monthly premium as well as various cost-sharing responsibilities such copays or deductibles. Signing up on time is important because you may pay a late penalty if you don’t sign up when you are first eligible, usually around your 65th birthday.
Two ways to sign up for Medicare Part D are available:
Medicare Part D stand-alone plans
Original Medicare patients can also enroll in Part D plans during their initial enrollment, or during the annual Medicare open enrollment period that continues until Dec. 7.
Medicare drug plans include generic and brand-name drugs. All plans must include the same drug categories such as diabetes or asthma medicines. However, providers have the option to choose which drugs are included in each plan.
Every Medicare Part D plan includes a formulary, which is a list of medications it covers. It will likely include brand-name and generic drugs, as well as at least two medications in the most prescribed categories. Formularies can change year to year, and even within the same year.
Certain Medicare D plans may have restrictions. These include authorization before a prescription is made and step therapy. This requires generic or lower-cost brand names to be used before the most costly drug is purchased.
Stand-alone Medicare PartD premiums can vary and deductibles for plan years 2021 may not exceed $445.
Medicare Advantage Plans that include Part D Coverage
Medicare Advantage Plans are also sold by private insurers and provide the same coverage found in Original Medicare Part A and Part B. Many offer additional benefits, such as vision and dental coverage. Part D prescription drug coverage is a major part of many Medicare Advantage Plans.
Each Medicare Advantage Plan that includes Part D coverage, just like stand-alone plans has its own formulary. There may also be restrictions.
While many Medicare Advantage Plans offer coverage for drugs for $0 premiums, some plans may still require a premium overall.
You can buy a standalone Part D plan if you select a Medicare Advantage Plan without Part D coverage.
Prices for Part D coverage
Part D coverage may require you to pay premiums. You’ll also be responsible for cost sharing including copays and deductibles.
You may also be subject to other cost-sharing rules.
When you and your insurance have paid $4,130 for covered prescription drug costs in 2021, you will hit the Medicare “donut hole”. You must pay 25% of all prescriptions during this phase until you have $6,550 in out of pocket costs. At that point, you will be eligible for “catastrophic” coverage.
You’ll be responsible for 5% of the cost for catastrophic coverage, which is $3.70 for generics or $9.20 for brand name drugs.