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The World of Medicare Part D!

The World of Medicare Part D!

Posted: July 9, 2021

JULY 2021

LET’S TAKE A DEEP DIVE INTO THE WORLD OF PART D

If you have been reading my blog posts up to this point, you are well on your way to becoming a Medicare expert! You now know that Part A is for your inpatient coverage, Part B is for your outpatient care and that WEA-MedPlus helps with the remaining 20% and more!

What about the elusive Part D prescription drug plan though? What’s all this about donut holes and catastrophic coverage? Don't worry! I go through it all (including examples) in detail below. Your wait is over young grasshopper. Let’s dive right in!

*Keep in mind that WEA-MedPlus does not offer a Part D prescription drug plan, however we would be more than happy to refer you to one of our agent partners or direct you to other helpful resources.


Part D Overview

Part D is a federal program administered through private insurance companies that helps with your medication needs. You pay a monthly premium to the Part D plan and in return, you use their network of pharmacies for your prescription medications.

 

Quick Tips

  • Part D: think of this as "D" for your prescription Drugs

  • Prescriptions covered under Part D are those that you take at home and are self-administered (not at an inpatient hospital or outpatient medical facility)

  • Part D plans are all regulated to meet certain minimum requirements:

  • Part D plans must have at least two drugs from every category of medication:

  • Example: there must be two (2) types of blood pressure medication to choose from

  • All Part D plans must cover all or substantially all of the available prescriptions from six (6) protected classes:

  • Antidepressants, Antipsychotics, Anticonvulsants, Antiretrovirals, Antineoplastics (used to treat cancer) and Immunosuppressants

  • Each Part D plan is different. Plans have different premiums and can charge different amounts even for the same prescription.

  • Part D plans end on 12/31 of each year and start over again on 1/1

  • Features of a Part D plan can change annually, such as: premium, benefits, formulary, tiers and deductibles

  • Part D plans may work with specific pharmacies and your best pricing may come from only those pharmacies. That’s why it’s a good idea to shop around for the best price!

  • Look for a well-rated company that allows you to shop where you want and has your prescriptions in its formulary

  • Check if the Part D plan needs prior authorization on certain drugs, has quantity limits or requires step therapy (where you try lower cost drugs first)

  • Part D has a monthly premium, unless you qualify for extra help

  • Penalties apply if you do not have some type of creditable coverage for your prescription needs

 

Formulary

A list of prescriptions covered by a Part D plan.

 

Tiers

Categories of prescriptions within the formulary. Medications are categorized into five (5) tiers by the level of cost sharing.

  • Tier 1: generics and the most common, lowest cost prescription drugs

  • Tier 2: may include some generic drugs, typically brand name drugs

  • Tier 3: mainly brand name drugs

  • Tier 4: specialty drugs, more expensive prescription drugs

  • Tier 5: specialty drugs, more expensive prescription drugs

*Note: Part D plans can have the same medication in different tiers. That's why it pays to shop around and pick the best plan for you!

 

Stages of a Part D Plan

  • Stage 1: Annual Deductible (if applicable - not all plans have a deductible)

  • The amount of money you spend before you receive any benefit from the Part D plan

  • You pay 100% of the drug cost until you reach the annual deductible, however, sometimes the most common drugs (usually Tier 1 & 2) are exempt from the deductible

  • Deductible amounts can vary by plan

  • The maximum deductible amount is set by Medicare each year. In 2021, the maximum deductible amount a Part D plan can have is $445.

  • Stage 2: Initial Coverage

  • Begins after you have met your deductible (if applicable)

  • In this stage, you pay copays on your prescriptions until the total cost of your drugs reaches the Initial Coverage Limit (ICL). The ICL includes everything you and your Part D plan pay. The ICL is $4,130 in 2021 and Medicare can change the ICL annually.

  • Here is an example:

  • Your prescription is $100

  • Your share is a $10 copay and your Part D plan pays the remaining $90

  • The total cost of $100 is what counts towards the ICL

  • If your total costs exceed the ICL limit of $4,130, you move into the Coverage Gap

  • Stage 3: Coverage Gap (often referred to as the donut hole)

  • Begins after you have met the ICL limit in Stage 2

  • Your costs typically increase during this stage

  • In this stage, you pay 25% of the cost for generic and brand name drugs. The pharmaceutical manufacturer pays 70% and Medicare covers the remaining 5%.

  • This pay structure continues until the TrOOP reaches $6,550 (in 2021).

  • TrOOP: "true out-of-pocket cost." The total of what you and the pharmaceutical manufacturer pay (not what Medicare pays).

  • Here is an example:

  • Your prescription is $100

  • You pay 25% (or $25), the pharmaceutical manufacturer pays 70% (or $70) and Medicare pays 5% (or $5)

  • You are going to get credit for what you and the pharmaceutical manufacturer pay - this is your TrOOP. In this example, $95 will go towards the $6,550 limit. 

  • In summary, you pay $25 for your prescription, but you get credit for $95

  • If your TrOOP reaches $6,550 you move into the Catastrophic Stage

  • Stage 4: Catastrophic Coverage (final stage)

  • Begins after you have met the TrOOP limit

  • In this stage, you pay the greater of:

  • 5% of the cost of the prescription, or

  • $3.70 for a generic and $9.20 for a brand name drug (in 2021)

  • Example: your prescription is a generic and it is $100. What will you pay?

  • 5% of $100 = $5.00

  • This is greater than $3.70

  • So, you would pay $5.00

  • Example: your prescription is a brand name and it is $25. What will you pay?

  • 5% of 25 = $1.25

  • This is NOT greater than $9.20

  • So, you would pay $9.20

  • There is not maximum out-of-pocket (MOOP) for this stage. You stay in Stage 4 until December 31st, then the cycle starts over again on January 1st.

 

Sometimes a visual helps!


Common Enrollment Periods

  • Initial Enrollment Period (IEP)

  • The first enrollment period when you become eligible for Medicare

  • This enrollment period allows you to get onto Medicare and enroll in a Part D plan

  • It is a 7-month period (including your birthday month)

  • 3 months prior to your birthday month, your birthday month, and the 3 months after your birthday month

  • Example: if you turn 65 on February 10th, your birthday month is February. Your IEP starts on November 1st and continues through May 31st.

  • If you miss your IEP, you will have to wait until the Annual Election Period

  • Annual Election Period (AEP)

  • October 15th - December 7th

  • A time of year when you can shop around and see the Part D plans and pricing for the upcoming year. This enrollment period happens every year.

  • You can change your Part D plan each year (as many times as you wish during AEP). The last plan that you pick is the one that you are committed too for the upcoming year.

  • Don't miss this window or you will need to wait until next year to change your plan or get coverage

  • Be sure to review the available plans for the upcoming year to make sure your plan still works for you

  • If not, you can change plans during AEP. Enrolling in a new Part D plan will automatically cancel out your old plan. Medicare will start your new plan on January 1st.

  • If you want to keep your current plan, you don't have to do anything. Your Part D plan will roll over and you will continue on your current plan as long as you pay your premium.

  • Special Enrollment Period (SEP)

  • Triggered by an event (loss of employer coverage, moving, etc.)

  • SEP's have a 63-day window

  • Once you use your SEP, this period of times ends. You don't have until the 63 days would've ended to change your plan. You have one choice during this period.

 

Types of Part D Plans

  • Stand-Alone Prescription Drug Plan (PDP)

  • These are their own plans and are not associated with a medical plan

  • You can shop around for stand-alone Part D plans each year and it does not affect any other part of your Medicare or WEA-MedPlus

  • Medicare Advantage Prescription Drug (MAPD) plan

  • If you take a MAPD plan, you must take the drug plan that is offered via the MAPD plan. You cannot shop around for a better Part D plan. Your medical benefits are bundled along with your drug coverage.

  • Don't accidentally lose your Medicare! You cannot have a stand-alone PDP and a MAPD plan at the same time. Medicare does not allow this. If you have a stand-alone PDP and enroll in a MAPD, you will lose your PDP.

 

You did it! You are a Part D master! Now go out and spread your knowledge to the young grasshoppers in your life!

 

 

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