Medicare Part D Plans - Prescription Drugs

What is Medicare Part D? Medicare in the United States is a federal program of the government. It is divided into four parts: Part A (deals with hospital coverage), Part B (deals with medical coverage), Part C (is a blend of Part A and Part B; may also include Part D) and Part D (deals with prescription drug coverage).

Medicare Part D plans subsidize the cost of prescription drug insurance premiums and prescription drugs for Medicare beneficiaries regardless of income. Part D coverage is available both as a stand-alone Prescription Drug Plan (PDP) or as a prescription drug benefit commonly added to a prescription drug plan. It does not require any physical examination.

Though joining Medicare Part D is voluntary, a sign up is required. Anyone who delays to sign up incurs a late penalty, premium surtax, that adds to their premium as long as they are in the program save for certain special cases. Enrollment is only allowed during open enrollment at the end of the year. For one to be eligible for Medicare Part D plans, they must be already enrolled in Medicare Part A and/or Part B. Enrollment is usually through one of the pre-approved private insurance plans.

When it comes to monthly Medicare Part D cost, it has no set amount. The premium paid is dependent on the drug plan one is on as they usually set their respective premiums every calendar year. Higher incomes have an effect on the premiums paid. Incomes over $85,000 for a single person or 170,000 for a married couple filing returns together attract a surcharge over and above the plan premium. Should one have a life-changing event that significantly affects one’s income such as retirement or divorce, recourse can be sought to deduct the surcharge from premiums payable. This is usually done by applying to Social Security to have the surcharges removed.

The Medicare Part D cost formulary is such that it has five main components: there is the monthly premium which of varies from plan to plan; an annual amount that is deductible usually used to cater for the coverage before Medicare kicks in. For 2018 this amount had a ceiling of $400; a percentage of the cost of each prescription under the copay system; a share of costs in catering for the coverage gap should one exceed the pre-set coverage limit; and a maximum of 5% of drug costs during the catastrophic period of coverage.

Beneficiaries do not typically get the same coverage. Different plans have their selection of benefits, choice of costs and separate designs. Congress only sets a minimum benefit that plans must exceed or at the very least meet. The law prescribes basic requirements usually setting ceilings and floors then leaving different plans free to leverage these metrics according to their wish and desire.

Finally, it is important to bear in mind that different plans charge different prices for the same drugs. The case is so because different plans negotiate for different prices for different drugs. It would therefore not be prudent to compare the price charged by one’s plan to acquire a similar drug with a neighbor or a friend as more often than not, they will be under a different scheme.