Learning About Medicare Part D

What is Medicare Part D ?

Medicare provides optional prescription drug benefits known as Medicare Part D through approved private insurance plans.

Eligibility Requirements

  • Any applicant who qualifies for or is currently receiving Medicare Part A or Medicare Part B is also eligible for Medicare Part D.
  • Current requirements do not include any physical exams.
  • The health status of applicants is not a valid reason for denial of coverage.
  • The amount of prescription drugs currently being taken by applicants is not a valid reason for denial of coverage.

Enrollment

  • Enrollment is voluntary.
  • To receive prescription drug coverage under Medicare applicants must enroll in a Medicare approved private insurance plan. There are two types of drug coverage plans are available.
    • PPD or “Stand-alone” plans which are plans that provide only prescription drug coverage. Usually, these plans are recommended for applicants that currently receive their other health benefits through the Medicare fee-for-service plan.
    • Medicare Advantage plans which are plans that cover both medical services and prescription drugs. Typically, these plans are recommended for applicants who want to receive all of their Medicare benefits in a single package. Usually, Medicare Advantage plans will be offered through a health maintenance organization (HMO) or a preferred provider organization (PPO).
  • Medicaid requires enrollment in a Medicare drug plan as soon as an applicant becomes eligible in order to receive prescription drugs through the program.
  • Unless an applicant already has drug coverage equivalent or better than Medicare, there is a late penalty applied if they have delayed enrollment in Medicare Plan D. The late penalty will be added to their premiums as long as they are in the program, except under certain circumstances.
  • Applicant’s that have delayed enrollment may only enroll during the open enrollment period.

Medicare Plan D Coverage and Cost

Under the law there is a standard benefit that determines the minimum that a Medicare drug plan must cover. All plans will be at least equivalent to the standard benefit, but the size of premiums and deductibles, the drugs covered, the copays, and the pharmacies used vary between plans. Policy holders with the standard benefits pay the following over a year:

  • A monthly premium
  • An annual deductible that is no more than $360 for 2016 and no more than $400 for 2017
  • A part of the cost of each prescription until a certain total amount has been paid by the policyholder and the plan. The amount paid for each prescription can be either a flat copay or a percentage of the cost.
  • Pay a percentage of the cost once the coverage limit has been reached also known as the “doughnut hole” phase. Once a certain level is reached which is set by law this phase ends.
  • Pay no more than 5% of the cost of prescription drugs once the policyholder has reached the out-of-pocket spending limit. The limit is reached when the policyholder has paid the amount set by law to exit the “doughnut hole” phase.