For most seniors, healthcare does not end at the doctor’s office. Whether to treat an acute illness or maintain long-term health, many seniors take prescription drugs. Unfortunately, seniors switching to Medicare don’t always realize that prescription drug coverage is not included under Original Medicare. Instead, prescription drug coverage usually needs to be purchased separately under Medicare Part D.
Prescription drugs can be extremely expensive without insurance coverage, and many seniors can’t afford large out-of-pocket payments on a routine basis. For this reason, it’s crucial that seniors learn about the different Medicare prescription drug plans available and how to select the plan that meets their healthcare needs.
Prescription drugs are excluded from Original Medicare
One of the biggest misconceptions about Medicare is that Original Medicare (Medicare Parts A and B) includes prescription drug coverage for seniors. This is not true. Original Medicare only includes services at the hospital and doctor’s office and does not include standard prescription medication you’d pick up at a pharmacy.
If you get a prescription from your doctor and don’t have Medicare prescription drug coverage, you might be shocked to see the bill! You must remember that Original Medicare does not cover everything, and additional coverage may be necessary to keep your out-of-pocket healthcare costs to a minimum. If you want insurance for your prescription drugs, you’ll need to enroll in Medicare Parts D or C, Medicare Advantage Plan.
What is Medicare Part D?
Medicare’s standard prescription drug plans are called Medicare Part D. Part D plans are standalone plans administered by private insurance companies. They work alongside Medicare Parts A and B to help cover some of the costs associated with prescription drugs.
Under Medicare Part D, you’ll pay a monthly premium for the plan. That plan will offer coverage on a select list of medications provided by a network of pharmacies. When you purchase drugs, you’ll be responsible for a copayment or percentage of the drug’s cost, instead of the full price of the prescription.
There are multiple different Medicare drug plans available to seniors. Each plan will have its own list of approved drugs separated into tiers, called a formulary. These plans will also differ when it comes to costs, such as your monthly premium, your annual deductible and your copayment/coinsurance per prescription tier. The plans available to you will usually depend on where you live and which insurance providers service your area.
The following costs may be associated with your Medicare Part D plan:
- Monthly premium: Each plan will set the amount you’ll pay per month to maintain prescription drug coverage. These premiums will vary depending on your plan’s benefits.
- Annual deductible: Some prescription drug plans require you to meet a deductible (a minimum out-of-pocket limit) before drug coverage kicks in. You’ll pay full price until you reach this limit. There are caps on the deductible amounts insurance providers can require. Some providers require a partial deductible, while others don’t require one at all.
- Prescription cost: Once your initial drug coverage kicks in, you may be expected to pay a certain amount for each prescription you purchase. This will either be a flat copayment per drug or a percentage of the medication’s cost.
- Coverage gap costs: Some Medicare prescription drug plans have what is called a “coverage gap” that begins after your initial coverage expires. The initial coverage limit is set by law and includes the amount both you and your insurance plan have paid for prescription drugs. After you reach this limit, you enter the coverage gap. At this point, you will be expected to pay no more than 25% of your drugs’ retail price. All of your out-of-pocket expenses during the coverage gap add up, and you can exit the coverage gap once you have spent a certain amount on drugs (known as the out-of-pocket spending limit) that year.
- Catastrophic costs: If you reach your out-of-pocket spending limit, the plan will begin to cover the majority of your prescription drug costs. During this “catastrophic” period, you’ll only pay up to 5% of your drug costs.
How much you end up paying for prescription drug coverage will ultimately depend on how many prescription drugs you require and what types of medications you need. Certain medications might fall in a more or less expensive tier in your plan’s formulary.
The costs associated with a plan can also change year after year. Your plan will inform you of upcoming changes and when those changes will take effect (typically January 1).
Medicare participants have the option to switch to a different Medicare Part D plan during certain parts of the year. This means that you aren’t locked in to one Part D plan for the rest of your life, and you can change your plan based on your coverage and spending needs.
Do you need Medicare Part D?
Medicare Part D is optional for seniors enrolled in Medicare Parts A and B, meaning you do not have to enroll in Part D at the same time you enroll in Original Medicare, or ever. However, enrolling in Part D later may subject you to a late enrollment penalty that you’ll pay for as long as you have Part D coverage.
Some seniors decide not to enroll in Medicare Part D when they enroll in Original Medicare because they aren’t taking any prescription medications. Unfortunately, this could result in high out-of-pocket costs if you end up having a health problem that requires prescription drugs later. Because of those permanent late enrollment penalties, you may end up paying more per month by enrolling in Part D later, rather than enrolling in a low-cost plan right away.
Remember that you can switch your plan during the Annual Enrollment Period if your current plan isn’t meeting your needs. You should evaluate your current and projected prescription drug costs and compare those to plans available to you prior to the AEP.
How does drug coverage work with Medicare Advantage?
If you are interested in enrolling in Medicare Advantage (Medicare Part C), your prescription drug coverage may look a little different. Some Medicare Advantage plans include prescription drug coverage in the plan itself.
If you are enrolled in a Medicare Advantage plan that has built-in drug coverage, you cannot enroll in a standalone Part D plan for additional coverage. Enrolling in a Part D plan while under this type of Medicare Advantage plan will automatically disenroll you from your Medicare Advantage plan and put you back on Original Medicare.
There are some types of Medicare Advantage plans that do allow you to enroll in a Part D plan in addition to Part C. These plan types include private fee-for-service and medical savings account plans.
It’s important to look into your Medicare Advantage plan’s drug coverage and compare those costs to the costs of Original Medicare plus a Part D plan.
How to choose the right prescription drug plan
If you decide to enroll in a Medicare prescription drug plan, you’ll want to explore all your options to find the right plan that meets your needs for the year. You might have a few dozen plans available to you, so research and cost comparisons will be necessary.
Make sure you look into the following when selecting a Medicare prescription drug plan:
- Whether the plan covers prescription drugs you currently take
- How much your copayments will be for any drugs you currently take
- How much you’ll pay in monthly premiums
- Whether the plan’s network includes pharmacies that are convenient to you
- Whether the plan has restrictions on certain drugs you take
One plan might not work for every senior, just how a plan might not meet your unique needs every year. Research and compare Part D plans to determine whether your current prescription drug coverage is appropriate for your health now and moving forward.
Choosing a Medicare prescription drug plan can be intimidating. If you have questions or want to explore your Part D plan options, contact SeniorCare Benefits. We represent a range of plans and will help you identify the right coverage for your needs. Call us today at 1-888-230-0269 so one of our agents can assist you.
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