How do Prescription Drug Plans Work?
Medicare Prescription Drug Plans are also known as Part D.
Medicare creates the base structure and then private companies develop the deductibles and copays as well as create the formulary - all within guideline.
Below is an outline of how the base structure works. Remember that these can be enhanced and vary greatly between companies and plans.
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Part D Plans tend to change quite a bit from one year to the next, so it's a good idea to reevaluate your options each year during the Annual Enrollment Period.
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Occasionally, a beneficiary might pay more or less than the Part D premiums listed on Medicare.gov or the health plan's site. These differences stem from a few things. People generally pay less if they receive Medicaid or Low Income Subsidy, and they pay more if they are subject to IRMAA (Income Related Monthly Adjustment Amount) or have a Late Enrollment Penalty.
Things to Consider
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Are my medications covered in the plan's formulary?
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Is my pharmacy in network as a preferred pharmacy?​
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Is there a deductible? If so, which tiers does it apply to?​
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Am I eligible for other coverage such as Tricare, VA, or an employer group plan?
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Do I qualify for Low Income Subsidy or Medicaid? Find out more about LIS.​​​​
Understanding Part D Payment Stages
Up to $590
Deductible Stage
Member pays 100% of the drug costs (if applicable) until they reach their annual deductible.
Once you reach the deductible amount, you pay a copayment or coinsurance in the initial coverage stage.
Up to $5,030
Initial Coverage Stage
Member pays cost-share until the total costs of drugs reach the Initial Coverage Limit (ICL). The ICL includes everything the member and plan pay.
Plans with no Deductibles start in this stage.
Once your yearly out-of-pocket costs reach $8,000, you move to catastrophic coverage.
Up to $2,000
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Catastrophic Coverage Stage
Once the member's total oyt of pocket costs reach $8,000 they will pay $0 for brand and generic drugs for the remainder of the year.
Few people will reach this stage.