Part D is your Prescription Drug coverage that is offered through private insurance companies that are under contract and regulated by the Centers for Medicare and Medicaid Services (CMS).
There are two ways to receive your Part D/Prescription Drug Coverage:
1. Through a Medicare Advantage Plan that includes Part D
Part D is included in most Medicare Advantage Plans. They are offered as a “package” for one price, including some of the zero premium plans.
2. Through a Stand-Alone Part D Prescription Drug Plan
Stand-Alone Part D plans are often purchased with a Medicare Supplement / Medigap Plan.
What does Part D Cost?
It depends on the plan you choose. Also, if your income is higher than most, Medicare will assess an additional premium, called an Income Related Monthly Adjustment Amount. It is similar to how Part B works. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above $85,000 (single) or $170,000 (married couple), then your Part D premium will be adjusted accordingly. For the part D premium income chart, click here
What does Part D Cover?
Prescription drugs are classified by tiers and are listed in a plan’s formulary (list of covered drugs). Below is an example of how a plan might divide its drug tiers:
Medicare established minimum benefit standards or guidelines that all insurance companies offering prescription drug plans must comply to. They must offer these minimum benefits that run from January 1st (or whenever your coverage begins) to December 31st.
Below is an example of Medicare’s minimum standard prescription drug plan:
Part D / Prescription Drugs – Medicare’s Minimum Standards for 2018:
Phase 1 - Annual Deductible
Phase 2 - Initial Coverage
✔ $3,750 (total cost for you and the insurance company)
Phase 3 - Coverage Gap (also known as the “donut hole”)
✔ You pay 35% for most brand name and 44% for generics
✔ up to $5,000
Phase 4 - Catastrophic Coverage
✔ You pay the greater of $3.35 for generics
✔ $8.35 for all other or 5% co-insurance
Once you enter the coverage gap, you may receive a 65% manufacturer discount on certain covered brand-name drugs and a 56% discount on generic drugs. Although you’ll only pay 35% of the price for that brand-name drug, the entire price will count as your TROOP (True-Out-Of-Pocket) spending towards the $5,000 that you must reach in out of pocket expenses during the coverage gap phase.
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