Prescription Drug Plan (Medicare Part D)

To get the best Medicare Part D Prescription Drug Plan that works for you, as your Medicare advisor we analyze the premiums and co-pays related to your drug list (the medications and dosages you use) for drug plans offered in your residential area.  This analysis is very important because at some point most Medicare drug plans include a limit on what they cover for drugs. 

Medicare Part D prescription drug plans run for a calendar year and you have to stay with that plan for a full year unless you have a special circumstance such as moving out of the area or a plan notifies you that they will be no longer be available in your residential area. Our video, When Can I Join, Switch or Drop Medicare Part D provides more detail.

Open enrollment for selecting a different drug plan runs from October 15 to December 7 each year.  New plan start dates begin January 1 of each year, and you will be locked into that plan FOR THE FULL YEAR.  If you do not select a new plan, the one you are enrolled in continues for another year.

When your INITIAL enrollment period is over, it’s important to make sure you have CONTINUOUS drug coverage to avoid the significant Medicare late enrollment penalty. You will be charged this penalty forever, as long as you have drug coverage from Medicare. 

The penalty is triggered when you don’t have Medicare drug coverage, or some other creditable drug coverage, for 63 or more days in a row anytime after your Initial Enrollment Period ends. 

The Part D penalty is 1% of the “national base beneficiary premium” times the number of months you went without Part D or creditable coverage. The “national base beneficiary premium” can be found on www.Medicare.gov.

CALCULATING THE PART D PENALTY

STEP 1 Count the number of full months when you had no drug coverage.

STEP 2 Multiply that number by .01.

STEP 3 Multiply the total from STEP 2 by the $32.74 (the national base beneficiary premium” for the MONTHLY penalty in 2023. 

Here’s the formula:

[number of months without coverage] X 0.01 (1%)  X [national base beneficiary premium] = monthly penalty

For example, if you go 29 months without Medicare or creditable coverage, the math is:

29 (months) X 0.01 (1 %) = .29 X $32.74 (2023 national base beneficiary premium) = $9.49/month penalty

Note: The penalty is rounded up to the nearest $.10, so this penalty would be $9.50 per month.

This amount, which changes EVERY year based on the national base beneficiary premium for that year, will be added to your plan’s regular monthly premium every month as long as you have Medicare Part D.

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REMEMBER - the national base beneficiary premium usually goes up every year, so the Part D penalty will also go up every year since the penalty is recalculated every year.

What Drugs Are Covered by Medicare Part D?

All Medicare Part D plans are required to provide for a wide variety of prescription drugs to ensure those who use Medicare have adequate access to their drugs. These drugs even include many drugs in “protected classes”, such as those used to treat HIV/AIDS and cancer. 

Every Medicare part D drug plan contains a formulary, or a list of those drugs covered under the plan. Usually the drugs are categorized in tiers, or different levels. The tiers contain different cost structures for the drugs included. The lower tier drugs are less expensive than drugs in higher tiers.

Medicare Part D plans change EVERY year. So, when considering various Medicare Part D drug plans, it’s critical to review the plan’s cost of the drugs that you take, or expect to take during that year. 

In the event the drug you need is in a higher-cost tier but a similar drug is in a lower tier (lower cost), your health care-provider can sometimes ask the plan to provide the more expensive drug for you at the lower tier cost.

Medicare Part D drug plans also pay for drugs needed to medically treat opioid use disorders. In addition, drugs like methadone and buprenorphine may be covered by the plan when prescribed for control of pain.

What drugs are covered by Medicare Part D? Ask us, your Medicare advisor, to review these drug coverages with you for any Medicare Part D drug plan you’re considering. 

The amount your drugs cost you may change based on: 

• How your drugs are "tiered" in your plan's formulary
• Your pharmacy choices in your plan's network 
• Mail Order (90 day) vs.  Pharmacy (30 day) 
• Whether you can receive Extra Help for Part D costs

A Medicare Part D Prescription Drug plan may, or may not, have an annual deductible. This is the amount you would have to pay before your plan starts to pay its share of the cost of your prescription drugs.

After you’ve paid the deductible (if your plan has one), the plan pays its agreed share and you pay your share (a copayment or coinsurance payment) of prescription drug costs.

When the TOTAL amount paid by BOTH you and the plan reach a certain dollar amount, $4,660 in 2023, you will most likely be required to pay up to 25% of prescription drug costs until YOUR TOTAL prescription drug spending reaches $7,400 2023. 

After YOUR prescription drug out-of-pocket costs exceed $7,400, you are covered under CATASTROPHIC COVERAGE. At that point the cost of your prescription drugs should cost only a small coinsurance percentage or copayment. 

It may be possible to dramatically reduce your out-of-pocket costs for prescription drugs! The possible options to reduce costs vary for each individual. For this reason, it is advisable to consult with a Medicare Advisor to determine how you might be able to limit your out-of-pocket costs. 

We’re here to help you.

It’s possible that you might qualify for Extra Help from Medicare to offset the costs of Medicare prescription drug coverage, if you satisfy specific income and financial resource limits. 

In 2023, a single person might qualify for Extra Help as long as their yearly income is less than $20,385. For a married person who lives with a spouse but has no dependents the annual income cannot exceed $27,465 to qualify for Extra Help.

The dollar limits might change every year. You could possibly qualify even if your income is higher depending on whether you have dependents who live with you.

If it’s determined that you don’t meet the requirements for Extra Help, there may be programs in your state that can help offset the cost of your prescription drugs. Get in touch with your state’s Medicaid office or the State Health Insurance Assistance Program (SHIP).

If your finances disqualify you from receiving Extra Help, there may still be programs offered in your state to assist in your payment for your prescription drugs. Call your state Medicaid office  and request more information from your  State Health Insurance Assistance Program (SHIP) . 

Please keep in mind that changes in your income or financial resources may help you qualify at a later date so be sure to reapply at that time. 

Financial resources that may be taken into consideration include:

• Available funds in your savings or checking accounts
• Stocks
• Bonds

However, other financial resources such as your car, home, household goods, burial plot or life insurance policies are NOT included as resources.

Above information regarding Medicare Part D Prescription Drug Plans resourced from www.medicare.gov. and "Medicare & You 2022