Medicare does not provide coverage for medications. There are two ways to receive prescription coverage, enroll in a Part D plan or receive coverage through a Medicare Advantage Plan.
Cost
The average monthly premium for a Part D plan is $55.50 in 2024. High-income Medicare beneficiaries can expect to pay an income-related monthly-adjusted amount, in addition to the premium. Most pay the standard amount. If you do not enroll when you are first eligible, you may be subject to a penalty. The Extra Help financial assistance program is available for qualified individuals.
Deductible
Most plans will have a yearly deductible and a maximum out-of-pocket cost. After that amount is met, Medicare will pay up to 75 percent of prescription costs. There are plans available that offer first-dollar coverage with no deductible and the coverage starts immediately.
Copayments
Most plans will have copayments or coinsurance. Medicare ensures that copayments are no more than 25 percent of the full cost of a prescription, and plans are required to pay no less than 75 percent.
Copayments Waived
Live in a long-term care nursing facility and are enrolled in both Medicare and Medicaid.
Plan waives the copayment for certain medications.
The pharmacy opts to waive the copayment for specific medications.
Once your plan reaches a maximum limit, then you enter the coverage gap when Medicare will stop paying. Leaving you responsible for 100 percent of your prescription cost.
Creditable Coverage
As a policyholder, you have the right to know whether or not your current plan meets the standard of creditable by Medicare. All companies offering policies are required by law to notify individuals about the status of benefits, and whether or not their plan meets the standard of Medicare. To be creditable, the policy must pay as much as Medicare.
Creditable Requirements
Provides coverage for brand name and generic.
Reasonable access to retail providers.
Pays an average of 60 percent of prescription cost.
No annual benefit maximum.
The amount payable will be at least $2,000 annually.
Integrated coverage, no more than a $250 deductible per year, no annual maximum, and no less than a $1,000,000 lifetime combined benefit maximum.
Differences
Most plans have different requirements. Some require prior authorization from your doctor before certain medications can be filled. Others impose limits on how much you can get at one time. Certain plans require you to try lower-cost drugs before a prescribed medication is covered. Each plan’s formulary is different, make sure the medications you currently take are covered, and your pharmacy is a participating provider.
Enrollment
The best time to enroll is when you are first eligible, during your Initial Enrollment period. If you don’t need coverage now, joining during this period ensures you avoid paying a penalty. Not everyone needs to enroll when they are first eligible, many seniors delay without paying a penalty. Many employer-provided insurance plans offer coverage that is considered creditable coverage by Medicare. If you do have prescription coverage you do not need to join. If you lose coverage (employer benefits end or COBRA ends) you only have a certain amount of time to enroll. The insurance provider will let you know if your coverage is creditable. Keep this documentation safe as you will need to show it to Medicare.
Penalty
If you go without coverage or another creditable plan for 63 days or more after your initial enrollment ends and then enroll later, you may owe a penalty. Amounts are calculated by multiplying the premium amount by the number of full months you went without creditable coverage. Penalties are added to your monthly premium for as long as you have coverage. If you went 6 months without coverage, your penalty would be .06 (for 6 months without coverage) times (Part D premium). Penalties are recalculated annually.
Resources:
https://www.medicare.gov/part-d/costs/part-d-costs.html
https://www.medicare.gov/part-d/coverage/rules/drug-plan-coverage-rules.html
https://www.medicare.gov/sign-up-change-plans/get-drug-coverage/get-drug-coverage.html
http://www.kff.org/medicare/fact-sheet/the-medicare-prescription-drug-benefit-fact-sheet/
MUC58-2017-BCBS
