Part D (Rx) Plans
Part D (Rx) Prescription Drug Plans
Once enrolled in Medicare you will want to choose supplemental insurance, either (Avenue 1) Medicare Supplement + Part D Rx Plan, or (Avenue 2) Medicare Advantage. This page explains the details of Part D Rx plans.
Part D Prescription Drug (Rx) Plans are insurance plans offered to help cover the cost of prescriptions purchased at a pharmacy, or via mail order. Medicare only covers Rx administered in a hospital or doctor’s office settings. Part D Plans cover prescriptions you may just take for one month or less (ex., an antibiotic), and also ongoing prescriptions (ex., blood pressure medicine).
Part D Prescription Drug Plan Benefits Follow a Standardized Benefit Design
When Congress passed legislation creating Part D prescription drug plans, the law laid out a basic benefits structure all plans must follow. There are 4 parts of a plan, and a person covered by the plan may enter each of those 4 parts throughout the plan year based on the total amount of prescription drug costs paid by both the insurer and the insured. The plan year is the calendar year, so the benefits start over each January 1. See below for more details.
Deductible Period
Part D prescription drug plans begin the plan benefits in a deductible period, from $0 of prescription costs paid, up to when the the deductible is met (plan deductibles range from $0 to $505). A “deductible” means that you begin by paying for the cost of prescriptions (the insurer is not) until the deductible is met. That sounds daunting, but keep these three factors in mind:
-Most Part D prescription drug plans exclude generics from the deductible! So copays for generic prescriptions start the first day of coverage. No deductible to meet.
-When you are pick up brand name prescriptions in the deductible period you are not paying the full (retail) cost of the prescription, but the discounted cost (the much lower cost the insurance company has negotiated with the pharmacy). This brings your actual cost down to a level much closer to the copay.
-Insurers add deductibles to lower the monthly premium cost of their plan offerings.
Initial Coverage Period
Once the deductible is met the insurance company pays for most of your prescription costs with you just paying a copay (a set amount). This initial coverage design period looks a lot like how many health insurance plans cover prescriptions.
The copay amount depends on the "tier" the drug is on. A tier is just a list of certain drugs the insurer formulated, (an example, “preferred generics”). Insurers are very transparent with their tiers, making it easy to determine your copay cost under the plan. Here is a tier example with copays from a current Part D plan:
-Tier 1 (preferred generic prescriptions): $0 copay for a one month supply
-Tier 2 (non-preferred generic prescriptions): $1 copay for a one month supply
-Tier 3 (preferred brand name prescriptions): $47 copay for a one month supply
-Tier 4 (non-preferred brand name Rx): 38% of the cost for a one month supply
This is just an example. Each company offers differing tier systems and copays.
This copay method of costs continue throughout the plan year, or until your total drug costs (the cost paid by the insurer plus the costs you have paid) reach $4,660. A majority of people stay in the initial coverage period for a remainder of the plan year.
Coverage Gap Period (the “Donut Hole”)
A minority people of people covered by Part D Rx plans reach the end of the initial coverage period at $4,660 in total prescription costs paid by both the insurer and insured, and then enter the coverage gap (you will hear this referred to as the "doughnut hole"). This coverage gap continues for the insured until the end of the calendar year, or until your total prescription costs reach $7,400.
During the coverage gap the insurance company pays 75% of the cost (you pay 25% of the cost) of all prescriptions, generic or brand name.
Remember, during this donut hole period the costs for prescriptions are at lower discounted prices, as negotiated between the insurance company and your pharmacy. In short, you are paying 25% of the discounted cost.
Catastrophic Coverage Period
If your total drug costs reach $7,400 before the end of the calendar year you enter the catastrophic coverage period for the remainder of the year. In this time the insurer pays a large majority of the cost of your prescriptions, with most plans asking you to pay just 5% of the discounted cost of the drug.
3 Quick Things to Know About Part D Rx Plans
Pharmacies Nationwide
You do want to visit a pharmacy that is in-network with your Part D plan insurer if you can, to get the best benefits. The good news is that each insurer has built a nationwide network of pharmacies you can utilize. And that network includes both chain pharmacies and local independent pharmacies.
Guaranteed Coverage
There are no health questions to answer or underwriting to be qualified to enroll in Part D plan coverage. You are eligible because you are turning 65, or 65+ and coming off of employer-sponsored health insurance (ex., at retirement), or during the annual open enrollment period (Oct. 7 through Dec. 7).
There is a Premium Cost
You will pay a monthly premium cost to have Part D prescription drug coverage, and Part D plan premium costs in the state range from $4 to $120 monthly. Most people we work with choose Part D plans with premium costs in the $4 to $24 monthly cost range. There are 24 plan designs offered by 9 insurers.
The Two Most Important Factors in Determining the Best Part D Rx Plan for You are the Prescriptions You Take and the Pharmacy You Utilize
Many plan benefits of Part D Rx plans are standardized. But federal rules do not mandate the prescriptions covered by plans, nor the pharmacies that are in-network. We ask for this information with people we work with, then research and determine the best plans based on that information.
Prescriptions on Differing Tiers
The insurance companies offering Part D plans place each covered prescription on a certain tier, a system they choose. If, for example, you take a brand name Rx that is on Tier 3 with one insurer, and on Tier 4 with another insurer….the insurer offering the lower tier ranking may be best (save you money).
In Network Pharmacies
Part D insurers make special deals with pharmacy chains and independents, negotiating lower costs for its members (the discounted costs). There are even in network pharmacies and “preferred” in network pharmacies. Choosing a plan where your pharmacy is preferred willl lower your out of pocket costs.
We Work With All of the Part D Rx Plan Providers, Including:
There are nine insurance companies offering Part D Rx plans in our area; Aetna, Blue Cross NC, CIGNA, Clear Spring Health, Elixir, Humana, Mutual of Omaha Rx, UnitedHealthcare and Wellcare. We can offer information on all nine and help you compare.
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