In this weeks blog, Financial Planner Kerrie Beene, CFP® digs into the parts and pieces of Medicare Part D - Prescription Coverage:
What is Medicare Part D?
Medicare Part D is an optional U.S. federal-government program to help Medicare beneficiaries pay for self-administered prescription drugs through prescription drug insurance premiums (most professionally administered prescriptions are covered under Part B)
Do you have to have Medicare Part D?
Medicare Part D is optional. However, if you do not enroll, you may pay very high prescription drug coverage costs. Additionally, if you do not enroll when you first become eligible at age 65, you may pay a lifelong penalty if you decide to sign up later.
For those that choose to sign up, understanding the differences in the plans is very important. In general, the higher the tier, the higher the member’s out of pocket cost for the covered drug.
Tier 1 - Preferred Generic
This is the lowest tier. This is the least expensive drugs your plan covers, includes preferred generic drugs.
Tier 2 - Generic
This tier includes preferred generic drugs that have proven to be the most effective in their class.
Tier 3 - Preferred Brand
This tier includes preferred brand drugs and non-preferred generic drugs.
Tier 4 - Non-Preferred Drug
This tier includes non-preferred brand drugs and non-preferred generic drugs.
Tier 5 - Specialty Tier
This is the highest tier. It contains very high cost brand and generic drug, which may require special handling and/or close monitoring.
When trying to decide which plan to choose, it is important to think about the following factors:
How often you take prescription drugs
Do you take generic, brand name, or a combination of both
Deductible preferences, such as, a $0 deductible plan with a higher cost-sharing or a higher monthly premium
Your copay and coinsurance options
Know what happens if you go into the Donut Hole
What is the donut hole?
Most Medicare Part D plans have a coverage gap. This coverage gap is called the Donut Hole. This is the time period after you and the drug plan have spent a certain amount of money for covered drugs, then you have to pay all costs up to the yearly limit. Once you have hit this limit, your plan will help pay for covered drugs again. For 2020, the gap starts when you’ve spent $4,020 on covered drugs.
In 2020, the donut hole will close for generic drugs.
Picking a plan can be frustrating and confusion. Just be sure to take the time to understand which tier/plan is best for you and do not hesitate to reach out for guidance.