Medicare Part D: Understanding Prescription Drug Coverage

Since 2006, Medicare Part D has helped beneficiaries manage the cost of prescription drugs, which are not covered by Original Medicare. Part D is available through private insurance companies either as a stand-alone Prescription Drug Plan (PDP) for those with Original Medicare or as part of a Medicare Advantage Plan. Each plan includes a formulary—a comprehensive list of covered prescription drugs.

To help control costs, many Part D plans categorize covered medications into “tiers.” Each tier represents a different cost level, with lower-tier drugs typically being more affordable. Because premiums for Part D plans vary and are set annually, it is important to review your prescription drug costs each year to ensure your plan meets your needs.Even if you do not currently take any medications, enrolling in a Part D plan when you first become eligible is recommended. Delaying enrollment may result in a “late enrollment penalty,” which increases every month you go without Part D coverage and can become costly over time.

If you have Medicare Part A and/or Part B and do not have other drug coverage, enrolling in a Part D plan as soon as possible can help protect you from rising prescription drug costs. Affordable options are available, and a licensed Assurance Life Group agent can assist you in finding the right plan for your needs.

What Do Medicare Part D Plans Cover?

Medicare Part D plans cover a broad range of prescription drugs, including medications in specific “protected classes” such as those used to treat cancer or HIV/AIDS. Both brand-name and generic drugs are included, with generic medications required to have the same active ingredients and meet the same standards for quality, purity, and strength as their brand-name counterparts.Each Medicare Part D plan must cover at least two drugs in every therapeutic category, but the specific drugs covered may vary by plan. If a plan’s formulary does not include the exact medication you need, a similar alternative is often available. If no suitable option exists, you or your healthcare provider can request an exception to access a specific medication.

Medicare drug plans typically organize medications into cost tiers, which determine how much you pay out-of-pocket. Here is a sample breakdown of these tiers:

• Tier 1: Most generic prescription drugs, lowest co-payment
• Tier 2: Preferred brand-name prescription drugs, medium co-payment
• Tier 3: Non-preferred brand-name prescription drugs, high co-payment
• Specialty Drugs and Biosimilars: High-cost prescription drugs, highest co-payment

What isn’t covered by Medicare Part D plans?

Each Medicare Part D prescription drug plan decides which drugs not to include in its formulary, though most exclude prescription drugs for things like weight loss or gain, fertility, sexual dysfunction, hair growth and over-the-counter medications.

Prescription Drug Coverage & Medicare Advantage: What To Know

Medicare pays a fixed amount to companies that offer Medicare Advantage Plans. Medicare Advantage Drug Plans (MA-PDs), which help cover drugs as well as medical services, are generally utilized by people who receive Medicare benefits in a combined package via a PPO or HMO. A Medicare Advantage Plan may also provide coverage for things like basic vision, routine dental, and hearing services, as well as fitness-based activities.

Medicare drug coverage costs

Due to the inherent variability of drug coverage costs, SmartMatch is unable to provide specific costs. Numerous factors account for the variety of drug coverage costs, including:

• Type of prescription
• Whether or not it’s on your plan’s formulary
• Which tier the drug falls under
• Whether your deductible has been met, or if you’re in catastrophic
• Whether your pharmacy is in or out of network

Medicare Part D: Enrolling and Changing Prescription Drug Coverage Plans

You can enroll in a Medicare Part D plan as soon as you become eligible for Medicare. It is recommended to enroll as soon as you qualify to avoid paying higher premiums in the future. If you delay enrollment, Medicare applies a 1% penalty to your premium for each month you go without coverage, though you have a 62-day grace period to sign up before the penalty begins. If you need assistance finding the right plan, a licensed insurance agent can guide you through the process and help you compare options to select the best coverage for your needs.

When to Enroll in a Prescription Drug Plan

Initial Enrollment Period
The Initial Enrollment Period (IEP) for Medicare Part D usually aligns with the IEP for Medicare Part B. This seven-month window begins three months before you become eligible for Medicare, which is typically three months before your 65th birthday month. During this period, you can sign up for a Medicare prescription drug plan to ensure you have coverage when you need it.

Open Enrollment Period
The Open Enrollment Period, also known as the Annual Enrollment Period or Annual Election Period, runs from October 15 to December 7 each year. During this time, you can join, switch, or drop a Medicare prescription drug plan. If you make a change during this period, your new coverage will begin on January 1, provided your request is received by the December 7 deadline.

Medicare Advantage Open Enrollment Period
The Medicare Advantage Open Enrollment Period occurs from January 1 to March 31 each year. During this time, individuals already enrolled in a Medicare Advantage Plan can switch to a different Medicare Advantage Plan or transition to Original Medicare with or without a separate prescription drug plan. It is important to note that you can only make one change during this three-month period.

Special Enrollment Periods
Special Enrollment Periods (SEPs) provide opportunities to adjust your prescription drug coverage outside of the standard enrollment periods if you experience certain qualifying life events. These may include losing other prescription drug coverage, moving to a new service area, or other specific circumstances. SEPs allow you to ensure you maintain the coverage you need when life changes occur.