​

 

Medicare Prescription Drug (Part D) Plans

​

Medicare prescription drug (Part D) plans can help cover the cost of your medications. You can enroll in a Part D plan either as a standalone plan or as part of a Medicare Advantage plan. If you have Original Medicare, Part A and Part B, you will need to enroll in a standalone Part D plan to receive prescription drug coverage.

​

It's important to note that Part D plans have specific service areas, and you must live in the area your plan is in. Additionally, some plans may have a specific pharmacy network they work with. Your costs may vary depending on whether a pharmacy is considered "in-network" or "out-of-network" and the tier of your medications. A Part D plan's categorization of drugs into tiers can also impact your out-of-pocket costs. To find the best plan for your needs, it's important to compare plans and understand the costs and benefits of each.

 

Note for Veterans:

People who have benefits through the Veterans Affairs may be able to get prescription drug coverage through the VA and may not need Medicare drug coverage. However, it is important to note that if you are eligible for both VA and Medicare drug coverage and choose to enroll in a Medicare Part D plan, you may be subject to a penalty if you do not enroll in a Medicare drug plan when you are first eligible. Talk with your VA benefits administrator before making any decisions

​

What do Medicare Part D plans cover?
 

Medicare prescription drug (Part D) plans cover the following:
 

• Types of drugs most commonly prescribed for Medicare beneficiaries as determined by federal standards

• Specific brand name drugs and generic drugs included in the plan's formulary (list of covered drugs)

• Commercially available vaccines not covered by Part B

 

It is important to note that while Medicare Part D plans are required to cover certain common types of drugs, the specific generic and brand-name drugs they include on their formulary varies by plan. You will need to review a plan's formulary to see if the drugs you need are covered.

 

What is not covered by Medicare Part D plans?
 

Part D plans vary regarding the drugs that are covered. You will want to review the list of covered drugs, or formulary, to confirm that the drugs you need are covered as not all Part D plans cover the same list of drugs. The following will not be covered:

​

• Drugs not listed on a plan's formulary

• Drugs prescribed for anorexia, weight loss or weight gain

• Drugs prescribed for fertility, erectile dysfunction, cosmetic purposes or hair growth

• Prescription vitamins and minerals

• Non-prescription drugs (e.g., over-the-counter medications)

• Drugs that are already covered by Medicare Part A and Part B

​

What should I know about a plan's drug list? 

Medicare Part D and Medicare Advantage plans have a drug list (also called a formulary) that tells you what drugs are covered by a plan. Medicare sets standards for the types of drugs Part D plans must cover, but each plan chooses the specific brand name and generic drugs to include on its formulary. Here are some important things to know:
 

• A plan's drug list can change from year to year. 

• Plans can choose to add or remove drugs from their drug list each year. The list can also change for other reasons. For example, if a drug is taken off the market. Your plan will let you know if there's a coverage change to a drug you're taking.

• Many Part D plans have a tiered formulary.

 

      Formulary tiers:

​

        Tier        Cost

        Tier 1         $

        Tier 2         $$

        Tier 3        $$$

        Tier 5       $$$$$

        Tier 6      $$$$$$

​

​

 

 

What does it mean if my prescription drug has a requirement or limit?

Plans have rules that limit how and when they cover certain drugs. These rules are called requirements or limits. You need to follow the rules to avoid paying the full cost of the drug out-of-pocket. If you do not get approval from the plan for a drug with a requirement or limit before using it, you may be responsible for paying the full cost of the drug. If needed, you and your doctor can also ask the plan for an exception.

 

Here are the requirements and limits you may see on a drug list:

​

PA – Prior Authorization

If a plan requires you or your doctor to get prior approval for a drug, it means the plan needs more information from your doctor to make sure the drug is being used and covered correctly by Medicare for your medical condition. Certain drugs may be covered by either Medicare Part B (doctor and outpatient health care) or Medicare Part D (prescription drugs) depending on how they are used. If you don't get prior approval, the plan may not cover the drug.

​

QL – Quantity Limits

The plan will cover only a certain amount of a drug for one copay or over a certain number of days.

ST – Step Therapy

The plan wants you to try one or more lower-cost alternative drugs before it will cover the drug that costs more.

​

B/D – Medicare Part B or Medicare Part D Coverage Determination

Depending on how they're used, some drugs may be covered by either Medicare Part B (doctor and outpatient health care) or Medicare Part D (prescription drugs). The plan needs more information about how a drug will be used to make sure it's correctly covered by Medicare.

​

LA – Limited Access

If a drug is considered "limited access," the FDA has said the drug can be given out only by certain facilities or doctors, not at a network pharmacy.

​

MME – Morphine Milligram Equivalent

Additional quantity limits (see above) may apply across all drugs in the opioid class used for the treatment of pain. The MME is designed to monitor safe dosing levels of opioids, especially for individuals who may be taking more than one opioid drug for pain management.

​

7D – 7-Day Limit

An opioid drug used for the treatment of acute pain may be limited to a 7-day supply to minimize long-term opioid use.

​

DL – Dispensing Limit

Drugs with dispensing limits are limited to a one-month supply per prescription.

​

ISSP - Part D Senior Savings Model

2022 - You will pay a maximum of $35 for a 1-month supply of Part D select insulin drugs during the deductible, Initial Coverage and Coverage Gap or “Donut Hole” stages of your benefit. You will pay 5% of the cost of your insulin in the Catastrophic Coverage stage. This cost sharing only applies to members who do not qualify for a program that helps pay for your drugs (“Extra Help”).

 

2023 - For Chronic Special Needs Plans - You will pay a maximum of $25 for each 1-month supply of Part D select insulin drug through all coverage stages. For All Other Plans - You will pay a maximum of $35 for each 1-month supply of Part D covered insulin drug through all coverage stages.

​

What does Medicare Part D cost?

Like Medicare Advantage plans, Part D stand-alone plans will also vary in costs based on the plan you choose. Each plan negotiates prices with drug manufactures and pharmacies. Your copays and coinsurance rates are based on these prices and on guidelines set by Medicare. You can find explanations of specific drug costs in each Part D plan's Summary of Benefits or Evidence of Coverage materials.

 

Your total prescription drug costs will also be impacted by the number of prescriptions you take, how often you take them, if you get them from an in-network or out-of-network pharmacy, and what Part D coverage stage you are in. Your costs may also be less if you qualify for the Extra Help program.

 

First, let's look at what kinds of costs you could pay for Part D, then dive into the different coverage stages and how they work.

Costs you could pay with Medicare Part D

 

With stand-alone Part D plans, you will pay a monthly premium and may also pay an annual deductible, copays and coinsurance.
 

Some plans charge deductibles, some do not, but Medicare sets a maximum deductible amount each year. In 2022, the annual deductible limit for Part D is $480. In 2023, the annual deductible limit for Part D is $505.
 

Copays are generally required each time you fill a prescription for a covered drug. Amounts can vary based on the plan’s formulary tiers as well as what pharmacy you use if the plan has network pharmacies.
 

Some plans may also set coinsurance rates for certain drugs or tiers. In this case the plan charges a percentage of the cost each time you fill a prescription.

 

Understanding the Part D Coverage Stages

During the year, you may go through different drug coverage stages. There are four stages, and it's important to understand how each impact your prescription drug costs. You may not go through all the stages. People who take few prescription drugs may remain in the deductible stage or move only to the initial coverage stage. People with many medications (or expensive ones) may move into the coverage gap (the Part D "Donut Hole") and/or catastrophic stage.
 

The coverage stage cycle starts over at the beginning of each plan year, usually January 1st.

​

Annual Deductible

You pay the full cost for drugs until you reach the deductible amount. Then you move to the Initial Coverage stage.

​

Initial Coverage

In this stage, the plan pays its share of the cost and you pay your copay or coinsurance. You generally stay in this stage until your year-to-date total drug cost reaches $4,660. Then you move to the Coverage Gap stage.

​

Coverage Gap (Donut Hole)

You pay no more than 25% coinsurance for any generic or brand name drugs until your total out-of-pocket costs reach $7,400. Then you move to the Catastrophic Coverage stage.

​

Catastrophic Coverage

In this stage, you pay 5% of the cost for each of your drugs, or $4.15 for generic (including brand drugs treated as generic) and $10.35 for all other drugs (whichever is greater). You stay in this stage for the rest of the plan year.

• Total drug costs: the amount you (or others on your behalf) and your plan pay for your covered prescription drugs. Your plan premium payments are not included in this amount.

• Out-of-pocket costs: The amount you (or others on your behalf) pay for your covered prescription drugs plus the amount of the discount that drug manufacturers provide on brand-name drugs when you’re in the third coverage stage -- the coverage gap (donut hole). Your plan premiums are not included in this amount.

​

 

A note about the Part D coverage gap (donut hole)
The Part D coverage gap—also known as the "donut hole"—opens when you and your plan have paid up to a certain limit for your drugs in the one year. When you're in this stage, you pay a bigger share of the costs for your prescriptions than before. You will exit the coverage gap only when the total amount you and others on your behalf have paid for your drugs reaches another set limit. The limits to enter and exit the coverage gap are set by Medicare, as well as what counts towards reaching the limits, and both can change each year.

 

*If you get Extra Help from Medicare, the coverage gap doesn't apply to you.