Medicare Prescription Drug Coverage (Part D) Explained

Navigating Medicare can be confusing! What coverage do you need? What does your plan cover? How much will everything cost? At Time for 65, we’re here to help you answer all of your Part D prescription drug coverage questions (and more!) so that you can effectively plan for your future health.

What is Part D?

Part D is a federal program administered through private insurance companies. These companies offer retail prescription drug coverage to Medicare beneficiaries. Prior to 2006 when Part D was instituted, tens of thousands of Medicare beneficiaries in America had little or no help with retail drug costs, often resulting in thousands of dollars in out-of-pocket costs each year.

Fortunately for today's Medicare beneficiaries, Part D plans offer comprehensive retail drug coverage. Beneficiaries can enroll in a standalone Part D drug plan that goes alongside their Original Medicare benefits, or they can choose a Part D drug plan that is built-in to a Medicare Advantage (Part C) plan.

How does Part D work?

Part D is, simply put, insurance for your medication needs. You pay a monthly premium to an insurance carrier for your Part D plan. In return, you use the insurance carrier's network of pharmacies to purchase your prescription medications. Instead of paying full price, you'll pay a copay or percentage of the drug's cost. The insurance company will pay the rest.

There are four stages to a Part D drug plan:

  1. Annual Deductible
    In 2021, the Part D standard Initial Deductible deductible is $445, which is a $10 increase from 2020. Plans may charge the full Part D deductible, a partial deductible, or waive the deductible entirely. You'll pay the network's discounted price for your medications until your plan tallies that you've satisfied the deductible. After that, you enter initial coverage.
  2. Initial Coverage
    During this stage of Part D drug coverage, you'll pay a copay for your medications based on the drug formulary. Each drug plan will separate its medications into tiers. Each tier has a copy amount that you'll pay. For example, a plan might assign a $7 copay for a Tier 1 generic medication. Maybe Tier 3 is a preferred brand name for a $40 copay, and so on. The insurance company tracks the spending by both you and the insurance company until you have together spent a total of $4,020 in 2020.
  1. The Coverage Gap
    After you've reached the initial coverage limit for the year, you enter the coverage gap. During the gap, you'll pay only 25% of the retail cost of your medications (this is so much better than in 2006 when many people had to pay 100% of their drugs in the gap). Your gap spending will continue until your total out of pocket drug costs has reached $6,550 in 2021.
    Please note that to get into the gap, Medicare tracks the total costs of what you and the insurance company have spent. But, in order to get out of the gap, they are counting only what you have paid in deductibles, copays, and gap spending that year, plus manufacturer discounts. They do not count anything the federal government contributes.
  2. Catastrophic Coverage
    After you've reached the end of the coverage gap, your plan will kick in to pay 95% of the costs of your formulary medications for the rest of the year. This feature in Part D drug plans helps you limit your potential spending if you have expensive medications.

Part D plans all follow federal guidelines.
Each insurance carrier must submit its plan outline to the Centers for Medicare and Medicaid Services annually for approval.

Do I Really Need a Medicare Prescription Drug Plan (Part D)?

Did you know that nine out of 10 people will require some type of medication by the time they hit 65? Although you may not require any prescription medication currently, chances are that you will in the future. Most people don't know that Medicare doesn't automatically cover prescription medications, and that's why choosing Part D coverage is so important. Rather than having to worry about high out-of-pocket costs for your medication, your Part D plan limits those costs to either a lower copay or coinsurance, depending upon the plan you select.

Although Part D coverage is optional, if you don't enroll in Part D as soon as you're eligible you may be required to pay a late-enrollment penalty if you enroll later—unless you qualify for an exception. The penalty is a fee set by Medicare that is added to your premium, and you pay it for as long as you have Part D.

Am I Automatically Enrolled In Part D?

Unlike Medicare Part A and Part B, you don't receive Part D prescription drug coverage automatically. Part D is optional and in order to get the coverage, you need to purchase a plan through a licensed private provider, like Time For 65's partnered licensed agents.

Part D plans cover your necessary medications. You may also receive prescription drug coverage through a Medicare Advantage plan with similar prescription coverage. Our licensed partnered agents will advise you on your options and assist you in selecting the best plan for your needs.

How Do I Enroll in a Medicare Prescription Drug Plan (Part D)?

Once you first become eligible for Medicare, you have the option to join in a standalone Part D plan or a Medicare Advantage plan with prescription drug coverage. You also have the option to enroll in a plan or change plans during the Medicare Annual Enrollment Period, which occurs every year from October 15 through December 7.

To learn more about Part D plan eligibility and enrollment, costs, coverage, plan types, and more, click heretap here and fill out the form to be connected to Time for 65's partnered licensed agents today.

Do I Have To Pay For a Medicare Prescription Drug (Part D) Coverage?

Yes, you'll pay a monthly premium to the insurance company whose Part D plan you choose to enroll in. Everyone pays for Part D unless you qualify for Medicare's Extra Help Program — Low-Income Subsidy. Payments for your Part D coverage are paid through a monthly premium to an insurance carrier. In return, you're able to use the insurance carrier's network of pharmacies to purchase your prescribed medications.

Part D helps you to save money on your prescribed medications because instead of paying full price, you just have a copay or percentage of the drug's cost. Your insurance company will pay for the rest of the cost. Although Part D premiums vary from one plan to another, according to the Centers for Medicare & Medicaid Services (CMS), he base beneficiary premium for a Part D plan in 2021 is $33.06, up from $32.74 in 2020 (actual costs may vary considerably).

How Much Will Part D Cost?

The specific amount you pay for your Part D will vary depending on:

  • The drugs you use
  • The plan you choose
  • Whether you go to a pharmacy in your plan's network
  • Whether the drugs you use are on your plan's formulary
  • Whether you get Extra Help paying your Part D costs

Part D monthly premiums are set by the insurance carriers and differ from plan to plan. On average, most states have plans starting around $15 per month.

In addition to monthly premiums, other Part D costs may include a yearly deductible, as well as copays and coinsurance each time a prescription is filled. If your plan has an annual deductible, you generally pay the full amount of your prescription drug purchases until the deductible is met.

Once you've satisfied your annual deductible, you'll be responsible for paying a share of the costs according to the terms of your plan. Your share, which is typically paid to the pharmacy at the time of pickup, could be a flat amount (copayment) or a percentage of the total amount (coinsurance).

Insurance companies that provide Part D and Medicare Advantage (Part C) plans with drug coverage set their own prices. However, the costs they include are usually very similar. The following information from Medicare includes the various payments you'll make throughout the year in a Part D plan:

  • Premium
    Most Medicare Prescription Drug Plans charge a monthly fee that varies by plan. You pay this in addition to the Medicare Part B premium. If you join a Medicare Advantage Plan (Part C) or Medicare Cost Plan that includes Medicare prescription drug coverage, the plan's monthly premium may include an amount for drug coverage.
  • Yearly deductible
    This is the amount you must pay each year for your prescriptions before your Medicare drug plan pays its share. Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible of more than $445 in 2021. Some Medicare drug plans don't have a deductible.
  • Copayments or coinsurance
    After you pay your plan's deductible (if your plan has one), the amount you pay for each prescription is either:
    • A copayment: With a copayment, you pay a set amount (like $10) for all drugs based on their tier. You may pay a lower copayment for generic drugs than brand-name drugs.
    • Coinsurance: With coinsurance, you pay a percentage of the cost (like 25%) of the drug
    Some Medicare Prescription Drug Plans have levels or "tiers" of copayments/coinsurance, with different costs for different types of drugs.
  • Costs in the coverage gap
    Most Medicare drug plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once you and your plan have spent $4,130 on covered drugs in 2021, you're in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs won't enter the coverage gap.
  • Costs if you get Extra Help
    Extra Help is a program to help people with limited income and resources pay Medicare prescription drug program costs, like premiums, deductibles, and coinsurance. If you get Extra Help but you're not sure if you're paying the right amount, call your drug plan. Your plan may ask you to give information to help them check the level of Extra Help you should get.
  • Costs if you pay a late enrollment penalty
    The late enrollment penalty is an amount added to your Part D monthly premium. You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:
    • A Medicare Prescription Drug Plan (Part D)
    • A Medicare Advantage Plan (Part C) (like an HMO or PPO) or another Medicare health plan that offers Medicare prescription drug coverage
    • Creditable prescription drug coverage

Part D plan premiums and costs can vary, even for coverage that is very similar. Many Part D plans include pharmacy networks, and you'll usually pay less for prescriptions filled at network pharmacies. We also suggest that you speak with your doctor to ensure you're taking the lowest cost medications available to you.

Drug Utilization Rules that Affect Your Part D Coverage

Medicare allows drug plan carriers to apply certain rules for safety reasons and also for cost containment. The most common utilization rules that you may run into are:

  • Quantity Limits
    A restriction on how much medication you can purchase at one time or upon each refill. If your doctor prescribes more than the quantity limit, then the insurance company will need him or her to file an exception form to explain why more is needed.
  • Prior Authorization
    A requirement that you or your doctor must obtain plan approval before allowing a pharmacy to dispense your medication. The insurance company may ask for proof that the prescription is medically necessary before they allow it. This usually affects medications that are expensive or very potent. The doctor must show why this specific medication is necessary for you and why alternative drugs might be harmful or ineffective.
  • Step Therapy
    The plan requires you to try less expensive alternative medications that treat the same condition before they will consider covering the prescribed medication. If the alternative medication works, both you and the insurance company save money. If it doesn't, your doctor should help you file a drug exception with your carrier to request coverage for the original medication prescribed. He or she will need to explain why you need the more expensive medication when less expensive alternatives are available. This often requires that he or she show that you've already tried less expensive alternatives that weren't effective.

Your overall Medicare prescription costs can be affected by these restrictions. Always check your medications in the plan formulary to see if restrictions apply to any of your important medications.

Contact us to be connected to Time for 65's partnered licensed agents to discuss specific Part D coverage options that meet your medication, budget, and health needs. Your licensed agent can also provide information on plans that have mail-order pharmacy benefits, which may offer additional savings.

What Do Medicare Prescription Drug Plans (Part D) Cover?

The federal government requires that Part D plans cover certain types of drugs and must give at least a standard level of coverage set by Medicare. However, each individual Part D or Medicare Advantage plan can vary the list of prescription drugs they cover (called a formulary). This list may include both brand-name and generic prescription drugs. Each individual plan can also choose how they place drugs into different "tiers" on their formularies.

It's important to note that specific prescriptions you take may not be covered by all Part D plans. When speaking with Time for 65's partnered licensed agents, it's important that you discuss your specific prescriptions, as well as review each Part D plan's drug list to confirm whether they cover your prescriptions or a generic alternative.

We also recommend that you contact Time for 65's partnered licensed agents every year to review your Part D prescription drug plan coverage and to check whether your plan covers the medications you need now, ones you may need in the upcoming year and to see if there are new plans that can help save you money or offer more benefits for the same price.

Part D plans cover:

 Anticonvulsants used to treat epilepsy and other conditions, including mental health conditions




 Immunosuppressant drugs

 HIV/AIDS drugs

Part D plans do not cover:

 Over-the-counter drugs

 Weight loss or weight gain drugs

 Drugs for cosmetic purposes or hair growth

 Fertility drugs

 Drugs used to treat erectile dysfunction

 Prescription vitamins and minerals (except prenatal vitamins and fluoride preparations)

Medicare Tracks Your Part D Spending

Did you know that Medicare itself tracks your True Out of Pocket Costs (TrOOP) for each year? This can protect you from paying certain costs twice. For example, say you have already satisfied the deductible on one plan. Then you later switch mid-year to a different Part D plan because you moved out of state. Your new plan will already see that you have paid the deductible for that year.

The costs for coverage gap and catastrophic coverage work the same way. Part D drug plans also have changes from year to year. Your plan's benefits, formulary, pharmacy network, provider network, premium and/or copayments/coinsurance may change on January 1st of each year. Medicare gives you an annual election period during which you can change your plan if it no longer meets your needs.

How Do I Qualify for a Medicare Prescription Drug Plan (Part D)?

Anyone who is eligible for Medicare coverage is also eligible for Part D prescription drug coverage. In order to enroll in Part D, you must be enrolled in Medicare Part A and/or Part B. Additionally, you're required to live in the service area of your Part D plan.

Other eligibility requirements for Part D include:

  • Age 65 or older:
    Most people first become eligible to enroll in Part D three months before your 65th birthday to three months after your birthday. Once you contact Time for 65's partnered licensed agents to enroll in Part D, you'll need to provide your unique Medicare number and the date you became eligible.
  • A qualifying disability:
    If you're not 65 years old, but have a disability that qualifies you to receive Social Security or Railroad Retirement Disability benefits, you're eligible for Part D. You become eligible for Part D three months before the 25th month of benefit payments until three months after your 25th month of receiving benefits.

Whether or not you're currently taking prescription drugs, you should call today to speak to our partnered licensed agents about how a Part D plan can work for you. If you delay enrollment in Part D for any amount of time and find that you need drug coverage later, you'll incur a premium penalty.

To learn more about Part D prescription drug coverage plans, please contact us to be connected with Time for 65's partnered licensed agents today. Time for 65's partnered licensed agents will help you choose from a variety of Part D plans that are designed to ensure you get the most out of your Medicare coverage.

Medicare Prescription Drug Plan (Part D) Enrollment Periods

When you're ready to enroll in Part D, there are certain rules and restrictions like enrollment dates that you must follow in order to change your plan or drop your coverage.

The following includes a general overview of important dates for adding or modifying your Part D coverage:

  • Open Enrollment Period: October 15 to December 7

    During the Open Enrollment Period, you can enroll in a plan that provides prescription coverage; change Part D plans; or drop Part D coverage, which may result in penalties if you don't have prescription coverage.

  • Change, Drop or Join Part D: January 1 to March 31

    During this time frame, you can change or drop your Medicare Advantage plan with Part D coverage or opt to join Original Medicare Part A and Part B. You're not able to join Part D during this time frame if you already have Original Medicare.

  • Add Part D to Existing Coverage: April 1 to June 30

    If you're already enrolled in Medicare Part A and Part B coverage and would like to add Part D, you're able to enroll during this time frame. If you would like to change your Part D plans after June 30, you'll need to wait for open enrollment, which is October 15 to December 7.

Formulary Exclusions and Restrictions for Pain Medications, Narcotics, and Opiates in
Part D Drug Plans

Pain medications, narcotics, and opiates include restrictions throughout formularies of every Part D drug plan in the market. The exclusions and restrictions are enforced in order to join with care providers and communities to prevent opioid misuse and addiction. To help with this effort, restrictions are implemented to align with the Centers for Medicare and Medicaid Services (CMS) Medicare Part D Opioid Overutilization Policy.

CMS tailored its approach to help distinct populations of Part D opioid users, including new opioid users (opioid naïve), chronic opioid users, users with potentially problematic concurrent medication use, and high-risk opioid users.

If you take a significant amount of pain medication, be prepared to deal with extra paperwork on a regular basis no matter which drug plan you choose. People often think that changing from one drug plan to another will help.

However, nearly all Part D carriers have restrictions on pain medications. You’ll encounter this no matter which plan you are on. Your best option is to pick a carrier with the lowest overall annual anticipated spending. From there, we suggest that you file the required exception forms to try to get as much approval as the plan will allow.

There are also some medications that aren’t covered by Part D. If you take a medication that is not on the formulary, such as a compound medication, you’ll have to file an exception to try to get that drug approved. Not all exceptions are approved, so be aware that you may pay out-of-pocket for any medication that’s not covered by your plan or by Part D as a whole.

Part D drug plans are among the most confusing Medicare topics. All too often people join a plan without checking to make sure the formulary includes their medications. Sometimes they also miss that one of their medications has step therapy rules applied. Many beneficiaries also miss their initial enrollment window, so if you need drug coverage, be sure not to miss your window. Contact Time for 65's partnered licensed agents today to ensure that you're covered!

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