Medicare parts A & B do not cover most prescription drugs. In 2006, Medicare Part D was introduced as a prescription drug benefit. It is optional and has a monthly cost. You can get part D as a stand-alone drug plan, or you it can be part of your Medicare Advantage plan which includes both your medical coverage and prescription needs.
How does it work?
- Deductible - You pay all your drug costs until you meet your plan's deductible, if applicable (not all plans have deductibles). A deductible is an amount you pay each year before your plan starts paying a portion of the cost shares.
- Initial Coverage - You pay a fixed amount — either a copay or coinsurance—for your drugs until you reach $3,750 (amount may change annually, so be sure to check your plan each year.)
- Coverage Gap - This is what's known as the donut hole, or coverage gap because you have less coverage during this stage. While you're in the coverage gap, you'll pay 44 percent coinsurance for covered generic drugs and 35 percent coinsurance for covered brand-name drugs. The coverage gap ends when you have met $5,000 annual out of pocket. (amount may change annually, so be sure to check your plan each year.)
- Catastrophic Coverage - Once you've reached that amount of $5,000, you'll pay the greater of $3.35 or 5 percent coinsurance for generic drugs, and the greater of $8.35 or 5 percent coinsurance for all other drugs. There is no upper limit in this stage.
What does Medicare Part D cover?
Provides outpatient prescription drug coverage. Each Medicare Prescription Drug Plan has its own list of covered drugs (called a formulary). Many Medicare drug plans place drugs into different "tiers" on their formularies. Drugs in each tier have a different cost.
Who is eligible?
If you are eligible for Medicare coverage, you are also eligible for the Medicare drug benefit (Part D). You must be enrolled in Medicare Part A and/or Part B to enroll in the Medicare drug benefit.
When do I enroll?
When you are first eligible for Medicare. If you do not join a Medicare drug plan during your Initial Enrollment Period, you may not be able to enroll until the Annual Enrollment period from October 15th – December 7th
What is the "Donut Hole"?
Most Medicare Prescription Drug Plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan has spent a certain amount for covered drugs. In 2018, once you and your plan have spent $3,750 on covered drugs, you're in the coverage gap.