Medicare Part D
Are you familiar with Medicare Part D? If not, relax; you are not the only one. Unfortunately, many people have no idea what it is, including many older adults who rely on it. That is why we have put together this handy guide to help explain Medicare Part D and how it can benefit you.
Medicare Part D, or the prescription drug benefit, is the component of Medicare that covers the majority of outpatient pharmaceuticals. Whether you have Original Medicare, Part D is available as a separate insurance policy or as part of your Medicare Advantage Plan.
We’ll briefly overview Medicare Part D and some available plans. We will also review some important considerations when selecting a plan. So let’s get started!
Medicare Part D Cost 2022
There are various expenses involved with Medicare Part D coverage. The first is an annual insurance premium. Then there’s cost-sharing at the pharmacy for your medications, which may include deductible spending if your Part D plan has one. Medicare Part D is a prescription drug plan that provides access to retail-supplied medications. This optional insurance program allows you to get prescriptions, usually at a lower cost. It is important to know that sometimes a cash price at the pharmacy might be lower than the copay through your insurance. Part D also protects from catastrophic medication expenditures. You do not enroll in Medicare Part D through Social Security. You will instead choose a Medicare Part D plan from a private insurance company. Private insurance companies provide Medicare Part D in conjunction with Medicare.
Medicare Part D Monthly Premiums 2022
In 2022, each state will offer numerous Medicare Part D plans, with up to 30 options available in some states. The list may differ by state, but in most cases, the monthly premium is expected to be between $8 and $200+ per month. In addition, every insurance firm has its formulary (list) of covered medications. The plan you select determines the monthly premium for a Part D plan.
Not all Part D drug plans are the same. Selecting a plan with a formulary that includes the medications you require is vital. If you join the cheapest plan without checking the formulary, you might discover that it does not cover one of your drugs after you’ve been locked in.
Some people with higher incomes may have to pay a higher premium for their Medicare Part D plan. For example, suppose your income was more than $91,000 alone or $182,000 as a married couple filing jointly. In that case, you will also be charged an additional premium for your Part D coverage. That is referred to as the Income Monthly Adjusted Amount, or IRMAA.
Cost-sharing in Medicare Part D
When you go to the pharmacy to pick up your medications, you will be charged for your portion of the costs. Also called a copay. Some plans have a deductible before the plan pays any cost sharing. The copays for medicine are separate from the deductibles.
Medicare Part D Deductible
The Centers for Medicare and Medicaid Services establish the basic minimum standards for Part D plans annually. Each year, each Part D plan provider must adhere to these standards. Every drug plan has four phases, and Medicare sets the bar for each stage yearly.
The Medicare Part D deductible is the first stage. The yearly deductible for 2022 is $480. That implies that each insurance company may require a maximum of $480 in upfront costs from you before your benefits begin to apply. If the insurance company desires, it can charge a lower deductible. No policy, however, can have a higher deductible than what Medicare allows for that calendar year. Plans with an upfront deductible typically have lower monthly premiums and drug copayments. Some firms waive the deductible, but the premiums and copays are typically greater than those for plans that charge a deductible.
Medicare Part D Copays
In most cases, Medicare Part D plans use a five-tier formulary structure for prescription drugs. Tier 1 is typically a generic drug that the FDA has approved. Non-preferred generics are typically covered under Tier 2. The insurance company will determine the copay for each tier. For example, one firm may charge a $3 copay for Tier 1 drugs while another charges $5. That is why reviewing the plan’s formulary is critical to ensure your medications are covered and determine how much you’ll have to pay for them. Tier 3 drugs are where you will usually find preferred brand-name drugs. Regular brand name drugs are often found on tier 4.
Furthermore, injectable drugs are usually found on tier 5. You should also know that one Part D plan could have a brand name drug on tier 2, whereas another Part D plan could have it on tier 4. That is why it is important to research all the Part D plans available in your area every year.
Medicare offers a plan finder tool. To utilize this tool, go to www.medicare.gov and select “Drug Finder.” Then, enter your zip code and prescription drugs to see if Medicare covers them. The Drug Finder Tool will show you which health insurance plans are the most cost-effective in your state.
Part D Extra Help
If you qualify, the federal government will help you pay for the costs of your Part D drug plan. That is referred to as the Low-Income Subsidy.
Beneficiaries who qualify will be eligible for help paying their monthly Part D premiums, annual Part D deductible, and copays for retail medicines. There are several levels of accreditation. The subsidy level is usually determined by how much help you receive with your monthly premiums. For example, a qualifying individual can be eligible for a full subsidy, meaning that all their Part D premium has been paid.
Medicare Part D Enrollment Period
Medicare Part D is voluntary insurance, but without it, you may be required to pay a lot of money on prescribed medicines in the future. So if you’re applying for Medicare when you turn 65, joining a Part D as soon as possible is a good idea.
Many working individuals delay their participation in Part D until they retire. You can postpone enrollment without penalty as long as your employer insurance provides drug benefits that are as good as Medicare Part D coverage. That is called creditable coverage. However, it is important to remember that you will not have any drug coverage once you retire and are no longer on your employer’s insurance plan.
How to Enroll in Part D Coverage?
You must join a Medicare Part D plan in your state. You can sign up for Medicare Part D straightforwardly with a Medicare Part D insurance carrier, by calling 800-MEDICARE, using the Medicare Plan Finder tool. Alternatively, using an insurance agent that focuses on Medicare plans. Enrolling through an agent provides additional assistance if you have any questions or difficulties with your drug coverage.
Part D drug coverage is included with some Medicare Advantage plans. It’s critical to double-check which medicines a Medicare Advantage plan covers before enrolling. Make sure your prescription plan covers the drugs you require. You can only participate in one Part D plan at a time.
When Can You Enroll in a Part D Plan?
There are only certain times when you can sign up for a Medicare Part D drug plan. When you get Medicare for the first time, you can join a Part D plan. Then, you can sign up for Part D during the Initial Enrollment Period (IEP), which lasts for seven months. There are three months before your 65th birthday, your birthday month, and three months after. Medicare Part D’s Annual Enrollment Period (AEP) starts on October 15 and ends on December 7. You can join a Part D plan or leave one during this time. That is because each Part D plan’s benefits, formularies, pharmacy networks, provider networks, premiums, copayments, or coinsurance may change on January 1.
The insurance company will send you an Annual Notice of Change (ANOC) every September. It will describe all of the modifications to your policy for the following year. If you agree to the changes, your Part D drug plan will be renewed automatically in January without you having to do anything. Some consumers, however, change their medication strategy during the annual election period if their requirements have altered and another policy is more suited.
Part D Special Election Periods
If you are already enrolled, you must wait until the next Annual Election Period to update or disenroll from your Medicare Part D plan. However, Medicare understands that there may be exceptional situations when you must alter mid-year. Therefore, they’ve created Special Election Periods (SEP) to allow for this.
For example, suppose you move out of state or discover that your group medical insurance expires in the middle of the year. In that case, this is an excellent opportunity to make a change. When these things happen, you have a short time to make the needed change during a Special Election Period. Your application for the new Part D plan must be coded correctly for you to be able to use it.
To take advantage of the new Part D plan, your application for the new Part D plan must be appropriately coded. An incorrect code on your application might result in a rejection, so work with a specialist who is knowledgeable about these plans.
Is Medicare Part D Right for Me?
Part D plans are not necessary for everyone. You may already have prescription drug coverage that is just as good or better than Part D. There are several ways to find out:
- Suppose you’re in a Medicare Advantage Plan that already provides Part D coverage. In that case, you don’t need a stand-alone Medicare Part D plan because these plans provide drug coverage.
- Suppose you’re in Medicare Part A or Part B. In that case, you can check with your doctor or other health care provider to see if your current prescription drug coverage is “creditable.” Credibility implies that the prescription medication coverage should pay, on average, as much as Medicare’s standard Part D prescription drug coverage. If it is, you can keep your drug coverage and don’t need to join a Medicare Part D plan.
- If you want to know if your prescription drug coverage is good, you should talk to the person in charge of your benefits. If you have a Medicare Advantage Plan or another Medicare health plan, your plan should give you this information every year.
- If you’re in Original Medicare, you can contact the drug plan. If you decide that you don’t want Part D or other prescription drug coverage, and then later decide that you want coverage, you’ll have to wait for the next annual enrollment period (unless you qualify for a Special Election Period).
If you don’t have Part D or other acceptable prescription drug coverage for 63 days or more in a row after your initial enrollment period is over, you may have to pay a late enrollment penalty. Then, as long as you have Medicare prescription drug coverage, you’ll have to pay this penalty.
