Part D (Prescription Drug Coverage)
Part D is coverage offered by private insurance companies for prescription drugs.
Each drug plan come with different price points. The prescription drug costs you pay is determined by the plan you choose and there are many options to choose from.
You don’t need a separate Part D policy if you have one of the several Medicare Advantage plans that cover prescription drugs.
It is important to mention if you go without creditable prescription drug coverage, you will have a lifetime penalty added on each month if you ever decide to enroll in Part D in the future.
How Part D Coverage Works
There are 2 different ways to get your Medicare Part D coverage:
Stand-alone Prescription Drug Plans (PDP)
A stand-alone drug plan is typically chosen to go along with a Medicare Supplement plan (which aren’t able to cover drugs). Your PDP will have its own card that you show at the pharmacy and you’ll have a monthly premium to be on the plan. Then your prescriptions will each have a co-pay depending on what Tier they are.
Medicare Advantage Prescription Drug Plans (MAPD)
Prescription drug coverage can also be built into Medicare Advantage plans. You’ll continue to have co-pays just like you would if you had a stand-alone plan, but often times you can find a MAPD that doesn’t
have a premium.
Part D Coverage Levels
Every Part D plan has 4 levels of coverage. You move from one level to another based on your drug expenses for the year.
Deductible
You pay the full amount of your medications until you reach the plan’s yearly deductible.
For 2024, the maximum deductible is set at $545. Depending on the plan, your deductible may be less and may not apply to generic medications.
Catastrophic Coverage
After your total out-of-pocket drug cost reaches $8,000, you won't pay anything for Medicare Part D covered drugs for the rest of the plan year. You’ll remain in this coverage level until January 1st when you reset back into the deductible.
Coverage Gap (Donut Hole)
You pay 25% of the cost of your medication.
Initial Coverage
You pay a co-pay or co-insurance for your medication depending on which “tier” it is.
Plans are insured or covered by a Medicare Advantage (HMO, PPO and PFFS) organization with a Medicare contract and/or a Medicare-approved Part D sponsor. Enrollment in the plan depends on the plan’s contract renewal with Medicare.