Medicare Part D – Prescription Drug Coverage Benefits

Medicare Part D is the program that helps pay for prescription drugs prescribed by a doctor. This does not include over-the-counter drugs that you can buy without a prescription. Part D is optional and every Medicare recipient is offered coverage. If you are new to Medicare, you should consider your Plan D options carefully. All plans are not created equal.

Prescription Drug Plans

You may sign up when you first become eligible for Medicare. Even if you are not taking many prescription drugs today, it may be smart to enroll when you are first eligible, to avoid potentially paying a penalty if you do not have creditable (see note below) prescription drug coverage or don’t get Extra Help (see section below). To learn how these plans work go to Learn How Plans Work.
Note: Creditable Prescription Drug Coverage is defined as Prescription drug coverage (for example, from an employer or union) that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage later.

What Drug Plans Cover

Each Medicare Prescription Drug Plan has its own list of covered drugs and these are sometimes placed in “tiers”. These tiers are important because drugs in each tier have a different cost. A drug in a lower tier will generally cost you less than a drug in a higher tier.

How to Get Drug Coverage

There are two ways you can be covered by Part D:

  1. With a stand-alone Part D Prescription Drug plan that is run by an insurance company or other private company approved by Medicare. These plans (sometimes called “PDPs”) add drug coverage to Original Medicare. Each plan can vary in cost and drugs covered, OR
  2. With a Medicare Advantage Plan (Part C) that offer Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans.

Note: You cannot enroll in both a stand-alone Part D plan and a Medicare Advantage plan that includes Part D. Be sure to review the plan’s drug list when deciding on a plan. Your drugs coverage and costs vary by plan so be sure to review the plan carefully. Look at annual deductibles, premiums and copays, in addition to your anticipated drug needs, when deciding.

Whatever plan you choose, Medicare drug coverage will help you by covering brand name and generic drugs at pharmacies that are convenient for you.

Part D Prescription Costs

Part D plans vary by list of covered drugs and costs like the annual deductible and copays. You’ll want to consider all your costs when choosing a plan. You can call toll free to: (877) 734-3441 TTY:711 or get information at our compare plans page to get specifics for your circumstances.

Here’s a table of potential costs to consider:

Monthly premium for drug plans Most Medicare Prescription Drug Plans charge a monthly fee that varies by plan. You pay this in addition to the Medicare Part B premium. If you belong to a Medicare Advantage Plan (Part C) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium you pay to your plan may include an amount for drug coverage.
Your premium could be higher based on income A small group—fewer than 5% of all people with Medicare—may pay a higher monthly premium for Medicare Part D coverage based on their income. This includes Part D coverage you get from a Medicare Drug plan or a Medicare Advantage Plan or Medicare Cost Plan that includes drug coverage. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago (the most recent tax return information provided to Social Security by the IRS) is above a certain limit, you’ll pay an extra amount in addition to your plan premium. Usually, the extra amount will be deducted from your Social Security check.
Yearly deductible for drug plans This is the amount you must pay each year for your prescriptions before your Medicare Prescription Drug Plan begins to pay its share of your covered drugs. Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible more than $325 in 2013. Some Medicare drug plans don’t have a deductible.
Copayment/coinsurance in drug plans Copayment, or coinsurance, is the amount you pay for each of your prescriptions after you have paid the deductible (if your plan has one). Some Medicare Prescription Drug Plans have different levels or “tiers” of copayments or coinsurance, with different costs for different types of drugs.

  • Coinsurance means you pay a percentage of the cost (for example, 25%) of the drug.
  • With a copayment you pay a set amount (for example, $10) for all drugs on a tier. For example, you may pay a lower copayment for generic drugs than brand-name drugs.
Costs in the coverage gap – 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 have spent a certain amount for covered drugs. In 2013, once you and your plan have spent $2,970 on covered drugs (the combined amount plus your deductible), you’re in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs won’t enter the coverage gap. Once you enter the coverage gap, you get a 50% manufacturer-paid discount plus an additional 2.5% paid by the Medicare Part D plan on covered brand-name drugs. Although you’ll only pay 47.5% of the price for that brand-name drug, the entire price will count as out-of-pocket costs which will help you get out of the coverage gap.

When Can I Join A Medicare Drug Plan?

Generally, you can join, switch, or drop a Medicare drug plan:

  • When you first become eligible for Medicare due to age (the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65).
  • If you get Medicare due to a disability, you can join during the 7-month period that begins 3 months before your 25th month of entitlement to disability payments, includes your 25th month, and ends 3 months after your 25th month of entitlement to disability payments.
  • During open enrollment, from October 15 – December 7. If you make a change during open enrollment, your coverage will begin January 1st of the following year.
  • At any time, if you qualify for Extra Help.
  • You’re getting care in an institution, like a skilled nursing facility or long‐term care hospital.

Special Enrollment Periods

You can make changes to your Medicare Advantage and Medicare prescription drug coverage when certain events happen in your life, like if you move or you lose other insurance coverage. These chances to make changes are called Special Enrollment Periods (SEPs) and are in addition to the regular enrollment periods that happen each year. Rules about when you can make changes and the type of changes you can make are different for each SEP.

For more information about SEPs, call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. They are available 24 hours a day, 7 days a week.

What Plan is Best For Me?

There are quite a number of different plans under Part D that provide different levels of coverage for different drugs. Currently there are over 1,800 plans nationwide. It can be quite confusing trying to figure what plan is best for you. Medicare has a number of free booklets that can help. Here are some links to worthwhile information:

Medicare Prescription Drug Plan Finder

The Medicare site also lets you find and compare drug plans, view your current drug plan, and enroll in a drug plan. For more information, click on the Medicare Prescription Drug Plan Finder.

State by State Information

Drug plans vary by state, so the Medicare web site also has booklets for each plan that is available in each state. To download the information for a specific type of plan in your state, click on Medicare’s Landscape of Local Plans State-by-State Breakdown. You can also download a chart that lists Plan D premiums by state for 2013. You can access this at Medicare Part D Prescription Drug Plan (PDP) Availability. To talk with someone who can help tailor a plan to your specific needs, call (877) 734-3441 TTY:711 or fill out our quick online form.

Programs for People with Limited Income and Resources

With certain income and resource limits, you may qualify for Extra Help to pay the costs of Medicare prescription drug coverage.

Drug costs in 2013 for most people who qualify will be no more than $6.60 for each brand name and $2.65 for each generic/$6.60 covered drug.

Other people may pay only a portion of their Medicare drug plan premiums and deductibles based on their income level.

You may qualify if you have up to $11,570 in yearly income and resources as an individual or $23,120 for a married couple.

Countable resources include:

  • Money in a checking or savings account
  • Stocks
  • Bonds

Countable resources do not include:

  • Your home
  • One car
  • Burial plot
  • Up to $1,500 for burial expenses if you have put that money aside
  • Furniture
  • Other household and personal items

If you don’t qualify for Extra Help, your state may have programs that can help pay your prescription drug costs. Contact your State Medical Assistance (Medicaid) office or your State Health Insurance Assistance Program (SHIP) for more information. Remember, you can reapply for Extra Help at any time if your income and resources change.

Medicare Part D Benefits