What is Medicare Part D?
Medicare Part D helps pay for the medications your doctor prescribes.
You can get Part D prescription drug coverage through a standalone Medicare prescription drug plan–also known as a PDP—or as part of many Medicare Advantage (Part C) plans. Original Medicare (Parts A and B) does not cover prescription drugs. Many people who chose Original Medicare also purchase a standalone Medicare prescription drug plan.
Medicare Prescription Drug Plans (Part D)
You don’t get prescription drug coverage with Medicare Parts A & B alone. Learn about Part D prescription drug plans, when you should enroll and what deadlines apply so you can avoid Medicare’s late enrollment penalty.
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What’s covered by Medicare prescription drug plans?
Medicare prescription drug plans (PDPs) are offered by private insurance companies approved by Medicare. By law, plans must cover the kinds of drugs most commonly prescribed. However, each plan can decide which specific drugs it will cover. For example, all plans must cover cholesterol-lowering drugs. But different plans may cover different brand name and generic drugs Generic prescription drugs are lower-cost alternatives to brand name drugs. They use the same active ingredients as their brand name counterparts and work the same way. According to the FDA, generic drugs are the same as brand name drugs in safety, strength, quality, the way they work, how they’re taken and the way they should be used. of this type. Each plan also decides how much its members must pay out-of-pocket when filling prescriptions.
The list of drugs covered by a particular plan is called its formulary. Formularies can change from year to year. It's important to check every year to make sure that the drugs you take are on your plan’s formulary.
What’s not covered by Medicare prescription drug plans?
Prescription drug plans do not help with the cost of:
- Drugs that are covered under Part A or B, such as those given in the hospital or a doctor’s office.
- Drugs that are not on the plan’s formulary. A plan may substitute and cover a similar drug that is on its formulary. In very rare situations, a plan may grant an exception and cover an off-formulary drug.
- Certain types of drugs that are excluded by Medicare. These include non-prescription drugs and prescription vitamins and mineral products (except prenatal vitamins and fluoride preparations). Medicare also excludes drugs used for:
- Anorexia, weight loss or weight gain
- Fertility promotion
- Cosmetic purposes or hair growth
- Symptomatic relief of cough and colds
- Erectile dysfunction
Individual plans may exclude other drugs from coverage. Plans can create their own coverage terms as long as they meet the requirements and minimum standards for Part D coverage set by Medicare.
What are the coverage limits with Medicare prescription drug plans?
Most prescription drug plans cover little or none of the cost of your drugs during the Part D coverage gap. You may or may not enter the coverage gap in any given year. It depends on how many and what medications you take.
The coverage gap is a cost-sharing stage of prescription drug coverage. If you reach this stage, you will pay more for your covered medications while it lasts.
The coverage gap begins after the total amount paid for your drugs has reached a certain amount. This amount is set by your plan, but Medicare establishes a maximum each year.
The total includes amounts paid by you, your plan and others on your behalf. Deductibles, copays, coinsurance and other payments count toward this limit. Premiums do not count.
The coverage gap lasts until you have spent your plan’s out-of-pocket limit in a single year. When the coverage gap ends, the catastrophic coverage stage begins. In this stage, you pay small copays to fill your prescriptions for the rest of that calendar year.
Prescription drug plans may have the following coverage rules as well:
- Plans may require prior authorization before you can fill certain prescriptions. The plan may cover the drug only if it is shown to be medically necessary.
- Plans may limit how much of a medication will be covered.
- Plans may have a step therapy requirement. This means that the prescribed drug is covered only after you try one or more similar, lower cost drugs.
What pharmacies can you use with a Medicare prescription drug plan?
Each prescription drug plan has a network of contracted pharmacies. You must use network pharmacies in order to get the discounted plan price for your drugs. Plans may define networks by geographic area, such as a state, or allow the use of pharmacies nationwide. Some plans offer a pharmacy mail-order benefit that allows you to have your medications mailed to your home.
You may have to use a non-network pharmacy in certain situations, such as if you become ill while traveling. Your plan may cover the prescription, but your share of the cost may be more than it would be through a network pharmacy.
What is a tiered formulary?
A tiered formulary divides drugs into groups based primarily on cost. A plan’s formulary might have three, four or even five tiers.
Each plan decides which drugs on its formulary go into which tiers. The decision is based on what the plan pays for the drug. In general, the lowest-tier drugs are the lowest cost. For example, you may pay less for a Tier 1 generic drug than for the Tier 3 brand name version of the same drug. Plan formularies often list drugs with lower prices as “preferred” drugs.