Are you concerned about prescription drug costs? A Medicare Prescription Drug Plan can give you peace of mind at an affordable price. Medicare prescription drug plans are made to supplement Original Medicare plans A & B.
Typically, a prescription drug plan will provide four tiers of benefits, the higher the tier the more expensive the copayments:
Generic prescription drugs
Preferred, brand-name prescription drugs
Non-preferred, brand-name prescription drugs
Specialty tier: High-cost prescription drugs
Drug costs under most Medicare Part D plans are low, but the amount you pay will vary by plan.
Here are some common terms that explain what you will pay for a Prescription Drug Plan. Click on each to learn more.
Premiums
The amount paid each month to keep your plan active.
Annual Deductible
Begins with your first prescription of the plan year.
You pay the full cost of your prescriptions until your spending adds up to the amount of your deductible. So, if your plan has a $0 deductible, you skip straight to the next stage. Keep in mind that some deductibles may only apply to drugs on specific tiers, which means you may not have any deductible if you do not take any medications on those tiers. Any payments for your monthly premium or for medications on tiers that do not apply to the deductible are not counted toward reaching the deductible.
Initial Coverage
Begins immediately if your plan has no deductible, or when the prescription payments you have made equal your plan's deductible.
Your plan pays for a portion of each prescription drug you purchase, as long as that medication is covered under the plan's formulary (list of covered drugs). You pay the other portion, which is either a copayment (a set dollar amount) or coinsurance (a percentage of the drug's cost). The amount you pay will depend on the tier level assigned to your drug.
This stage ends when the amount spent by you and your plan on yourcovered drugs adds up to equal the initial coverage limit set by Medicare for that year. Your monthly premium payments do not count toward reaching that limit.
Coverage Gap
Begins when you and your plan have collectively spent the yearly limit on your covered drugs.
Not everyone will enter the coverage gap (also referred to as the "donut hole"). In the coverage gap, the plan is temporarily limited in how much it can pay for your drugs. If you do enter the gap, you'll pay 25% of the plan's cost for covered brand-name drugs and 25% of the plan's cost for covered generic drugs. Keep in mind that while the percentage you pay for brand-name drugs is lower, the price of that drug may be much higher than the generic option.
Calculate the amount you would owe for each to see which one really offers the best cost savings for you.
You exit the coverage gap when your total out-of-pocket cost on covered drugs (not including premiums) reaches $8,000. Your out-of-pocket cost is calculated by adding together all of the following: yearly deductible, coinsurance, and copayments from the entire plan year, and what you paid for drugs in the coverage gap (including the discounted amounts you didn't pay in that stage).
Catastrophic Coverage
Begins when your out-of-pocket costs reach $8,000 on covered drugs. After your out-of-pocket cost totals $8,000, you exit the gap and get catastrophic coverage.
During this payment stage, the plan pays the full cost for your covered Part D drugs. You pay nothing. You will remain in this phase until the end of the plan year.
You are eligible for Prescription Drug Plans if...
You are 65 years of age or older.
You must be enrolled in Medicare Part A and/or Part B.
You are under 65 but have a qualifying disability.
You have end-stage renal disease that mandates dialysis or a kidney transplant.
Have any Questions? Ask us anything, we'd love to answer!
