With Medicare Part D, you’ll pay a share of the cost of the medications you take. Each plan that provides drug coverage, whether it’s a standalone plan or a Medicare Advantage (Part C) plan with drug coverage built in, will include cost sharing (monthly premiums, copays or coinsurance, and deductibles).
What’s your share of Medicare Part D costs?
Each plan that provides drug coverage will share costs a little differently. Look at the details of a plan you’re interested in to see how its Medicare Part D cost sharing works. Here’s an example.
Examples
In Medicare Part D, there is no Medicare-approved price. Each company negotiates its own prices with pharmacies and drug manufacturers. Your copays and coinsurance are calculated using the plan’s price for the drug and guidelines set by Medicare. The price you pay is usually discounted because you’re part of a big group purchase. Prescription drug coverage also typically uses cost sharing in which you must pay the plan’s total drug price. The plan pays very little for a certain period. This is the “coverage gap” or “donut hole.”
Example: Moderate drug spending
Helen, age 65, spends $80 a month for two drugs. She joins a Medicare Advantage plan with built-in drug coverage. There’s no additional premium for drug coverage. Because her spending is fairly low, she only reaches Step 1 cost sharing. She still saves money.
| Total annual drug costs without a Medicare Part D plan |
$960 |
| Annual premium for drug coverage with Medicare Advantage plan |
$0 |
| Step 1 cost sharing |
$240 |
| Step 2 coverage gap |
$0 |
| Step 3 catastrophic coverage |
$0 |
| Total Helen pays |
$240 |
| Total annual savings with Medicare Part D plan |
$720 |
Example: Heavy prescription drug spending
Enrico, age 66, has several chronic conditions. Without coverage he spends more than $950 a month on drugs. He has Original Medicare (Part A and Part B), plus a standalone Medicare Part D drug plan with a $329 annual premium. Because his drug costs are high, he reaches catastrophic coverage.
| Total annual drug costs without a Medicare Part D plan |
$11,400 |
| Annual premium for drug coverage |
$329 |
| Step 1 cost sharing |
$710 |
| Step 2 coverage gap |
$3,840 |
| Step 3 catastrophic coverage |
$236 |
| Total Enrico pays |
$5,115 |
| Total annual savings with Medicare Part D plan |
$6,285 |