Medicare Part D: Prescription Drug Coverage

Since its inception in 2005, there has been a lot of confusion regarding Medicare Part D. While most people understand that Medicare Part D provides prescription drug coverage, many still have questions related to the cost of Medicare Part D prescription drug coverage, how to sign up for coverage and when the enrollment period begins and ends.

How Did Medicare Part D Originate?

Medicare Part D is the prescription drug benefit for Americans aged 65 and older resulting from the Medicare Modernization Act of 2003, providing all beneficiaries the option to add prescription drug coverage.

What Does Medicare Part D Cover?

If you wish to participate, you must elect the Part D coverage and select a corresponding prescription drug plan or Medicare Advantage Plan. It is important to note that some prescription medications may be excluded from this program. A Part D drug is one that is approved by the Food and Drug Administration, for which a prescription is required, and for which payment is required under Medicaid. Biological products, including insulin and insulin supplies, and smoking cessation drugs will also be covered under Part D.

What Does Medicare Part D Cost?

The premium for Medicare Part D drug plans varies depending on what drugs you use, which Medicare drug plan you select and whether you qualify to receive extra help paying your drug costs. Medicare Part D has an annual $250 deductible and reimburses 75% of the first $2,250 in prescription drug costs. Once the initial coverage limit is reached, you will be subject to another deductible, known as the "donut hole," in which you must pay the full cost of prescription medication. The most you would have to pay out-of-pocket is $3,051.25. When the total out-of-pocket expenses on formulary drugs, including the deductible and initial coinsurance reaches $3,600 for the year, you pay $2 for generic or preferred drugs and $5 for other drugs, or a 5% coinsurance, whichever is greater.

What is the Enrollment Period for Medicare Part D?

The initial enrollment period to join a Medicare drug plan is three months before your 65th birthday to three months after you turn age 65. Each year between November 15 - December 31 you can switch to a different Medicare drug plan if your needs change. (Note: People who are dually eligible for Medicare and Medicaid can switch drug plans at any time.)

What if I already have a Medicare Part D Prescription Drug Plan? The drug plans that were available this year will not necessarily remain the same next year. Drug plans may have changed their premiums and cost-sharing requirements, the drugs on their formulary, and/or the rules for obtaining those drugs (e.g., prior authorization requirements, step therapy, and quantity limits).

Like many new health plan programs, there was a shroud of mystery regarding Medicare Part D when the government first rolled it out in 2005. However, as more and more people sign up for this valuable coverage, they are starting to realize that signing up for the program is easy. Once you have a Medicare Part D prescription drug plan in place, be sure to review your policy each year to ensure the plan continues to meet your needs.

Content provided by medicare.gov.

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