Medicare Part D Benefits
4 things to know about what Medicare Part D covers:
- Each Part D plan may have its own unique set of benefits.
- The plan’s formulary and tiers will determine which drugs are covered and how much you pay.
- Coverage rules can impact how and when you receive your prescription drug coverage.
- Your plan may have in-network pharmacies that offer lower out-of-pocket drug costs.
Part D plans have different formularies (drug lists), tiers, coverage rules, and networks, which will affect how you get your drugs covered. Make sure you review a plan’s benefit details before enrolling, especially the formulary. The formulary tells you what drugs are covered by a specific plan.
The Part D "donut hole" coverage gap may affect how much you have to pay out-of-pocket to use your Medicare Part D benefits.
When does coverage start?
If you are 65 and enroll in a Part D plan during your Initial Enrollment Period (IEP), your coverage will start the first day of the month after you enroll.
If you enroll during your IEP and you are not yet 65, your coverage will start the first day of the month you turn 65.
Medicare Part D formulary (drug lists) and tiers
Your Part D plan’s formulary and tiers will determine if your prescription drugs are covered and how much you will pay out-of-pocket for those drugs.
A formulary is a drug list that shows which drugs are covered by a plan. You may face higher out-of-pocket costs if you need a medication that is not on your plan’s approved drug list.
Many Part D plan formularies also place prescription drugs into different tiers. Drugs in different tiers will have different costs. Prescription drugs in lower tiers usually have smaller co-payments than drugs in higher tiers.
The following example from Medicare.gov shows how drug tiers may be structured:
|Tier||Co-payment||Types of drugs|
|1||Lowest co-payment||Most generic prescription drugs|
|2||Medium co-payment||Preferred brand-name prescription drugs|
|3||Higher co-payment||Non-preferred brand-name prescription drugs|
|Specialty tier||Highest co-payment or co-insurance||Unique and/or high cost prescription drugs|
Plan formulary updates
A Part D plan formulary may change from year to year. Insurance providers may change plan benefits as long as the changes follow Medicare guidelines.
If you currently take a covered prescription medication, your Part D plan provider must notify you if any formulary changes will impact your coverage.
Part D prescription drug plan coverage rules may affect how and when you receive your prescription drugs.
The rules may include:
- Quantity limits
- Prior authorization
- Step therapy
If you or your medical practitioner believes that one of your Part D plan’s coverage rules should be waived, you may request a plan exception. Medicare.gov provides more information about your Part D coverage protections.
Quantity limits are caps on how much prescription medication you can get during a specific time period.
If a drug requires prior authorization, your medical practitioner must contact your insurance plan and explain that the prescription is medically necessary.
Step therapy is a form of prior authorization. It requires you to try less expensive drugs that are effective for treating your medical condition before you can move up to a more expensive drug. Your plan may require you to try a generic form of medication before it covers a brand-name prescription.
You and your medical practitioner must prove that the generic medication did not work before the insurance company approves the use of a more expensive drug.
Part D plans may have contracts with pharmacies in an established plan network. "Nearly all PDPs (87%) use pharmacy networks," according to the Kaiser Family Foundation.
If you visit in-network pharmacies, your prescription drug costs may be lower. If you fill a prescription at a non-network pharmacy, your plan may not cover your medication’s cost at all.
Your Part D plan’s network pharmacies may include retail pharmacies, preferred pharmacies, mail-order programs, and 30- or 90-day retail pharmacy programs, according to Medicare.gov.
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Last Updated: 8/16/2016