PRESCRIPTION DRUG PLAN
What's Medicare Prescription Drug Plan (PDP)?
Medicare Part D prescription drug plans are also known as PDPs. These are standalone plans that can be purchased through private insurance companies. PDPs provide coverage for prescription drugs and medications and may also cover some vaccines too.
Original Medicare (Parts A & B) doesn't provide prescription drug coverage. If you have Original Medicare and need prescription drug coverage, you’ll want to sign up for a Part D prescription drug plan.
What Does a PDP Cover?
Plans will vary by location and provider in terms of costs and specific drugs covered. Each plan will have a list of specific drugs it covers, known as a formulary, but all PDPs are required by law to cover certain common types of drugs.
Medicare Part D plans are required to cover the Shingles vaccine, but they may also cover other vaccines such as Tdap, for the flu and pneumonia. What vaccines are covered outside of Shingles will depend on your plan. You can learn more about Medicare and vaccine coverage from the Center for Medicaid and Medicare Services (CMS) and by talking directly with the plan’s provider.
Enrolling in a Part D Prescription Drug Plan
To get a PDP plan, you will have to enroll directly with the plan provider. Unless you qualify for a Special Enrollment Period due to working past 65, it’s best to enroll in Part D when you’re first eligible for Medicare. This will be during your Initial Enrollment Period.
If you do not enroll in Part D when first eligible and do not qualify for a Special Enrollment Period, you could face financial penalties. You can learn about financial penalties in this blog.
Can I Combine a PDP Plan with Other Medicare Coverage?
Yes, you can combine Medicare coverage parts with a Part D plan. A stand-alone PDP can work with Original Medicare (Parts A & B) and certain types of Medicare Advantage plans such as Medicare Medical Savings Account plans without drug coverage or Private Fee-for-Service plans.
You can have a stand-alone prescription drug plan with certain types of Medicare Advantage plans so long as the plan:
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Can’t offer coverage for prescription drugs
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Chooses not to offer coverage for prescription drugs
If after the first time you enroll you decide to change your PDP, you can do so each year during the Medicare Annual Enrollment Period, which begins October 15 and ends December 7.
Part D prescription drug coverage is important to ensuring you can get all the medications you need to live your healthiest life.
Costs in the coverage gap or Donut Hole
Most Medicare drug plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs.
Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once you and your plan have spent $4,430 on covered drugs in 2022 ($4,660 in 2023), you're in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs won’t enter the coverage gap.
Brand-name prescription drugs
Once you reach the coverage gap, you'll pay no more than 25% of the cost for your plan's covered brand-name prescription drugs. You'll pay this discounted rate if you buy your prescriptions at a pharmacy or order them through the mail. Some plans may offer you even lower costs in the coverage gap. The discount will come off of the price that your plan has set with the pharmacy for that specific drug.
Although you'll pay no more than 25% of the price for the brand-name drug, almost the full price of the drug will count as
out-of-pocket costs to help you get out of the coverage gap. What you pay and what the manufacturer pays (95% of the cost of the drug) will count toward your out-out-pocket spending. Here's a breakdown:
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Of the total cost of the drug, the manufacturer pays 70% to discount the price for you. Then your plan pays 5% of the cost. Together, the manufacturer and plan cover 75% of the cost. You pay 25% of the cost of the drug.
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There’s also a dispensing fee. Your plan pays 75% of the fee, and you pay 25% of the fee.
What the drug plan pays toward the drug cost (5% of the cost) and dispensing fee (75% of the fee) aren't counted toward your out-of-pocket spending.
Example
Mrs. Anderson reaches the coverage gap in her Medicare drug plan. She goes to her pharmacy to fill a prescription for a covered brand-name drug. The price for the drug is $60, and there's a $2 dispensing fee that gets added to the cost, making the total price $62. Mrs. Anderson pays 25% of the total cost ($62 x .25 = $15.50). The amount Mrs. Anderson pays ($15.50) plus the manufacturer discount payment of $42 ($60 x .70 = $42) count as out-of-pocket spending. So, $57.50 counts as out-of-pocket spending and helps Mrs. Anderson get out of the coverage gap. The remaining $4.50, which is 5% of the drug cost ($3) and 75% of the dispensing fee ($1.50) paid by the drug plan, doesn't count toward Mrs. Anderson's out-of-pocket spending.
If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan's coverage has been applied to the drug's price. The discount for brand-name drugs will apply to the remaining amount that you owe.
Generic drugs
Medicare will pay 75% of the price for generic drugs during the coverage gap. You'll pay the remaining 25% of the price. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.
Example
Mr. Evans reaches the coverage gap in his Medicare drug plan. He goes to his pharmacy to fill a prescription for a covered generic drug. The price for the drug is $20, and there's a $2 dispensing fee that gets added to the cost. Mr. Evans will pay 25% of the plan’s cost for the drug and dispensing fee ($22 x .25 = $5.50). The $5.50 he pays will be counted as out-of-pocket spending to help him get out of the coverage gap.
If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan's coverage has been applied to the drug's price.
Items that count towards the coverage gap
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Your yearly
deductible , coinsurance, and copayments
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The discount you get on brand-name drugs in the coverage gap
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What you pay in the coverage gap
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Items that don't count towards the coverage gap
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The drug plan
premium
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Pharmacy dispensing fee
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What you pay for drugs that aren’t covered
Get More With Elkin Insurance
Our qualified agents will shop the Medicare Supplement markets to find the best value Medicare Prescription Drug (PDP) policy with the most stable rates and a plan to fit your needs.
To learn more about this and other Health related topics, talk with a professional in your community. Make an appointment to speak with one of our professionals and see for yourself the Elkin Insurance difference. At Elkin Insurance "We Care About You".
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