How Does Medicare Part D Work?

Medicare Part D, the part of Medicare that covers prescription drugs, is sold by private companies, who are authorized by the Government’s Medicare program to provide Part D plans. These plans are approved on an annual basis, and generally, are sold as an annual contract.

In most states, there are 30-40 plans that are offered and premiums range from approximately $15/month to $100+/month. So there is a big range. Likewise, there is a big variance in the benefits provided by the plans, so it is essential to compare based on your specific needs, medications, etc. The plans can, and often do, change each calendar year. If your medication needs change, the plan changes, or something changes about your health, you can, and should, re-evaluate the plans on an annual basis. You can change plans during the annual election period (AEP), which runs from October 15-December 7 each year.

Medicare Part D plans can typically be used at most “chain” pharmacies, and many plans also have a mail-order option. However, it is important to check with your current pharmacy, particularly if you use a local or independent pharmacy, to make sure that they accept your plan.

When you pick up your medications at the pharmacy, you will pay a co-pay amount that is called the “Initial Coverage Level”, unless you have not met your plan deductible or have entered into the “coverage gap”. If you enter into the coverage gap, which starts at $2930 in retail costs, you will pay a larger portion of the costs of your medication – 50% on brand name medications and 95% on generic medications.

Part D plans can be used nationwide, in most cases, at chain pharmacies that accept your plan. However, if you plan to be traveling, it is always a good idea to either take your medications with you or call ahead to make sure there will not be a problem picking up your medications where you will be.

Part D plans are an important part of your future financial security, as the average person on Medicare does need multiple medications at some point. That said, it is an optional part of Medicare. You do not have to enroll in a Part D plan. If you do not, though, there is a penalty that Medicare charges. The penalty is 1% per month that you don’t have a Part D plan. This 1% is applied to your premium when you do sign up for a plan. For example, if you decline a plan for a year, then you would pay a 12% penalty on your premium when you do sign up.

If you have any questions about Part D or want more information, please contact us on our Website. Or, you can call us at 877.506.3378.


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