What is Medicare Part D?
Medicare drug coverage helps pay for prescription drugs you need. Even if you don’t take prescription drugs now, you should consider getting Medicare drug coverage. Medicare drug coverage is optional and is offered to everyone with Medicare. If you decide not to get it when you’re first eligible, and you don’t have other creditable prescription drug coverage (like drug coverage from an employer or union) or get Extra Help, you’ll likely pay a late enrollment penalty if you join a plan later. Generally, you’ll pay this penalty for as long as you have Medicare drug coverage. To get Medicare drug coverage, you must join a Medicare-approved plan that offers drug coverage. Each plan can vary in cost and specific drugs covered.
All plans must cover a wide range of prescription drugs that people with Medicare take, including most drugs in certain protected classes,” like drugs to treat cancer or HIV/AIDS. A plan’s list of covered drugs is called a “formulary,” and each plan has its own formulary. Many plans place drugs into different levels, called “tiers,” on their formularies. Drugs in each tier have a different cost. For example, a drug in a lower tier will generally cost you less than a drug in a higher tier.
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After your True Out-of-Pocket (TrOOP) costs for prescription drugs reach $7,400 - including manufacturer discounts on brand name drugs - you then pay the greater of 5% or small co-pays on medications for the rest of the year.
You are responsible for 100% of your prescription drug costs until your deductible* is met.
*Your plan may have an annual deductible of no more than $505.
Some plans carry a zero-dollar deductible.
In some plans the deductible may not apply to certain low cost or generic drugs.
The Coverage Gap
After you and your plan have together spent $4,660 on prescription drugs, then you enter the "coverage gap." Now you pay 25% of the cost for both generic and brand-name drugs, plus a small pharmacy dispensing fee of about $1-$3.
Plan Year Restarts
No matter what, everything resets on January 1, and you return to the deductible stage at the beginning of the next year.
You pay a copay or coinsurance. Your Part D plan pays the rest for prescription drugs included on your plan's formulary, or list of covered medications.