Medicare Part D (Prescription Drug Coverage)
Medicare Part D is prescription drug coverage and was first offered in 2006. Part D is available through private companies that contract with Medicare to provide coverage. Each Part D prescription drug plan can vary in cost and drugs covered. If an individual does not enroll in Medicare Part D during a specific period he/she may pay a penalty when he/she does enroll-unless he or she has continuous creditable prescription drug coverage offered through another plan (e.g., employer or individual). Original Medicare alone does not cover the cost of prescription drugs.
Medicare Part D Donut Hole (aka Coverage Gap)
Medicare Part D is voluntary and is designed to provide prescription drug coverage with Medicare Part A and B coverage. Like Part B, there is a monthly premium, which can be automatically deducted from your Social Security benefits. And like many insurance plans, Part D plans have differing levels of coverage before and after an out-of-pocket expense limit is reached. Unlike most insurance plans, Part D has a "coverage gap" or "donut hole", which begins once you and your drug plan have spent a certain amount for covered drugs. Once the out-of-pocket limit is reached, the gap closes and prescription benefits begin again.
How the Part D Prescription Drug Coverage Gap Works
Medicare Part D Covers
- All drugs mandated by Medicare though limitations and preauthorizations may apply
Medicare Part D Does Not Cover
- Drugs not on the Medicare formulary
- Certain drugs that are covered under Medicare Part B
Anyone who has Part A and/or Part B and lives in a plan's service area is eligible for Part D.
Individuals with limited income or resources may qualify for Extra Help, a Medicare program to help pay prescription drug program costs. For more information about Extra Help go to medicare.gov
People with Medicare (who do not already have prescription drug coverage through an employer or union, COBRA, or other means) can obtain prescription drug coverage by either:
- Joining a (stand alone) Medicare Part D prescription drug plan; or
- Joining a Medicare Advantage plan that includes Part D prescription drug coverage. Costs can be different for each plan, but all Medicare drug plans must provide at least the standard level of coverage set by Medicare.
Beneficiaries who don't enroll in a Medicare Part D prescription drug plan when they are first eligible may have to pay a late enrollment penalty to enroll in a plan later if they don't maintain creditable coverage. Most people who wait until after the end of their Initial Enrollment Period (IEP) to join a plan will have their premiums go up 1 percent of the national base beneficiary premium for every month they waited to enroll. These individuals will usually have to pay this penalty as long as they have Medicare prescription drug coverage.
Before selecting a Medicare Part D plan, you should determine if the prescription drugs you currently take are on their formulary, and what the costs are. You can visit www.medicare.gov to compare Medicare Part D prescription drug plans.