The purpose of this article is to educate our readers on the workings of Medicare Part D. We will explore the benefits of Part D and how to enroll in Part D as well as how to avoid some costly mistakes.
What is Medicare Part D
Medicare Part D refers to the Medicare prescription drug benefit. It is a benefit which is available to an individual once the individual turns the Medicare age of 65. Medicare Part D is an elective benefit. Meaning you do not have to participate in the benefit. However, if you choose to not participate at age 65 but at a later date, you will have to pay a higher premium as a financial penalty for enrolling at a later date (beyond age 65). This penalty is based on the number of month’s you went without Part D coverage. The penalty is for the time you have coverage.
Before Medicare Part D seniors were not in the best position when it came to managing prescription drug cost, President George W Bush originally proposed part D in 2003 and went into effect in 2006. The enactment of Medicare Part D has dramatically improved the medical care of seniors. If an individual is eligible for or receiving Medicare, they are eligible for Medicare Part D. To be eligible for or receiving Medicare means you are signed up for Medicare Part A and/or Medicare Part B. One can obtain the Part D benefit through two types of plans which are administered by private insurance companies. One can choose a stand-alone Prescription Drug Plan (PDP) for drug coverage, or they can join a Medicare Part C (Medicare Advantage Plan). The Medicare Advantage Plan jointly covers additional healthcare cost not covered by Medicare Part A and Part B. The plan may provide a prescription drug benefit. It is important to note that to participate in a Medicare Advantage Plan, an individual must be signed up for both Medicare Part and Part B.
How to Enroll
One can enroll directly through the prescription plan administrator via an insurance broker or an exchange -called Medicare Plan Finder. The Medicare Plan Finder is run by the Centers for Medicare and Medicaid Services (CMS). You can access the plan finder by going to www.medicare.gov.
The Plan Finder is an excellent tool as you list the prescription drugs you are taking and the dosage. After following a guided process, you will be directed to the pans that will best meet your needs. You will have the opportunity to review the dollar benefit paid for your prescriptions as well as out of pocket cost. One of the most important things to look for with the finder is to make sure your prescriptions are covered under the prescription drug formulary of the pharmacy vendor you are reviewing. The finder will also show you what your prescription drug cost would be if you did not enroll n Medicare Part D. The finder will also allow you to enroll in a Part D plan directly.
Many individuals that elect a Prescription Drug Plan (PDP) from the Plan Finder or by directly enrolling with a carrier will choose to also enroll in a Medicare Supplement to help cover the cost Medicare will not cover. To select the Medicare Supplement that will best meet your needs, we suggest you connect with an independent insurance broker.
As mentioned earlier you may also obtain a prescription drug benefit be enrolling in a Part C or Medicare Advantage Plan as many times the Medicare Advantage Plan will offer prescription benefits. It is important to remember that there is no public option for Medicare Part D. All plans are offered by private companies that require you to participate in an enrollment process.
Medicare places requirements on companies offering prescription drug benefits through Medicare Part D. The company must offer plans that have at least the “standard” minimum benefit or one that is actuarially equivalent to the standard. The companies may also provide more generous benefits.
Plan Cost
When you enroll in a prescription drug plan, be it through a PDP or a Medicare Advantage Plan, you will incur a cost. The PDP will charge you a monthly premium while, in most cases, the Medicare Advantage plan will include the value of the prescription benefit in the monthly cost of the Medicare Advantage Plan. However, there is an additional cost you need to be aware of.
Most plans will require you to pay a deductible before benefits are paid. The amount of this deductible is set by Medicare every year. For the year 2019, the deductible can not exceed $415. You also might pay copayments as a dollar amount or percentage for your prescriptions. These amounts are dictated by the pharmacy tier your prescription is identified with. The Plan Finder will assist you in determining what these costs are.
One of the cost it is imperative one understand is the cost incurred when one falls into the coverage gap or the “donut hole.” This means there is a temporary limit on what the drug plan will cover drugs. For 2019 the coverage gap is determined once you and your plan have spent $3,820 on covered drugs. Once this happens you are in the coverage gap. This amount may change every year. Once you are in the coverage gap, you will pay no more than 25% of the price for the brand name drug in 2019. It is essential to review the plan for the amount you will pay while you are in, the coverage gap. The coverage gap will close, but again, you need to consider the plan.
In summary regarding cost, be sure to calculate the monthly plan premium, copayments, and potential coverage gap cost when determining which plan will best meet your needs. If you carefully review your expense, in the beginning, you will avoid frustration in the future
Mistakes to Avoid
The number one mistake I have found that individuals will make regarding prescription drug coverage is what I call the “assumption mistake.” An individual assumes they automatically receive prescription drug coverage by signing up for Medicare Part B. This is not true. Please remember you must sign up for prescription drug coverage as it is not included with Medicare Part A or Part B.
The second mistake I see people make is that they do not take the time to read and review the coverage they are purchasing. If they had taken ten minutes to review the coverage, they could have eliminated significant worry and frustration. Medicare does an excellent job of requiring prescription vendors to make the proper disclosures regarding coverage, but Medicare cannot guarantee the consumer will read the information provided by the vendor. So please read and review.
Final Thoughts
Medicare provides for seniors an excellent opportunity to meet the prescription needs of all seniors. It is crucial that one understands the process of enrolling and how the coverage will work. In understanding how the coverage will work, Medicare provides an excellent tool in the prescription finder. If one will be sure to enroll on a timely basis and use the tools offered by Medicare and in many cases, the wisdom and experience of an independent insurance broker that specializes in Medicare one will reap all the benefits Medicare has to offer.