One of the most frequent question we get at SBG Insurance Group is “how can I lower my prescription drug costs?” While we have many solutions, for those on Medicare, the most obvious answer is Medicare Part D!
Medicare Part D is a federal government program that provides prescription drug coverage for Medicare beneficiaries. It was established under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and became effective on January 1, 2006.
Medicare Part D is a voluntary program that is available to all Medicare beneficiaries, including those who are enrolled in Original Medicare (Part A and Part B) or a Medicare Advantage plan (Part C). The program is administered by private insurance companies that contract with the federal government to offer prescription drug coverage to Medicare beneficiaries.
There are two ways to enroll in Medicare Part D: either by enrolling in a standalone Prescription Drug Plan (PDP) or by enrolling in a Medicare Advantage Prescription Drug (MAPD) plan. PDPs are standalone plans that offer only prescription drug coverage, while MAPD plans combine prescription drug coverage with other Medicare benefits, such as hospitalization and doctor visits.
Medicare Part D plans have a formulary, which is a list of prescription drugs that are covered by the plan. The formulary may have different tiers, with each tier representing a different cost-sharing amount. Beneficiaries may have to pay a deductible, coinsurance, or copayments for their medications, depending on the specific plan they are enrolled in. Matching the a Part D plan’s formulary to a beneficiary’s medication list is a vital step to make sure that the beneficiary is on the correct plan. A licenses insurance agent, like those at SBG Insurance Group can help walk a beneficiary through the process.
Medicare Part D also has a coverage gap, commonly known as the “donut hole.” Once a beneficiary reaches a certain limit on their drug costs, they enter the coverage gap and have to pay a higher percentage of their drug costs out-of-pocket. However, since 2011, the Affordable Care Act has been gradually closing the donut hole, and by 2020, beneficiaries paid only 25% of the cost of their medications in the coverage gap. In 2023 the donut hole starts at $4,660. After you’ve spent $7,400 out of pocket, you’re out of the Coverage Gap and moved into Catastrophic Coverage.
Medicare Part D also has an annual open enrollment period, which runs from October 15 to December 7 each year. During this time, beneficiaries can switch from one Medicare Part D plan to another or enroll in a plan for the first time. The open enrollment period also allows beneficiaries to:
- Switch from Original Medicare (Part A and Part B) to a Medicare Advantage plan (Part C), or vice versa.
- Change from one Medicare Advantage plan to another.
- Change from one Medicare Part D prescription drug plan to another.
- Enroll in a Medicare Part D plan if they did not enroll during their initial enrollment period.
- Disenroll from a Medicare Advantage plan and return to Original Medicare.
Beneficiaries in some areas may also qualify for an extended open enrollment period due to being a part of a federally recognized disaster. Talk to a licensed insurance agent in your area to see if you qualify.
Overall, Medicare Part D has been successful in providing prescription drug coverage to millions of Medicare beneficiaries. However, there are still concerns about the high cost of prescription drugs and the impact on beneficiaries with limited incomes. Other tools are available to help with your prescription drug costs. Talk to SBG Insurance Group today and we can help put you on a plan that best suits your needs!
