Medicare Part D prescription drug coverage, often referred to as Part D, is provided and coordinated by Medicare-approved private insurance companies. Any beneficiary who is eligible for Original Medicare, Part A and/or Part B, and permanently resides in the service area of a Medicare Prescription Drug Plan, can sign-up for Medicare Part D.
Medicare Part D coverage is optional, but if you don’t enroll in Part D as soon as you’re eligible, you might pay a late-enrollment penalty if you enroll later.
Key Points to Part D – Prescription Drug Plan:
- Medicare Part D is simply insurance for your medication needs
- Beneficiaries can enroll in a standalone Part D drug plan that goes alongside your Original Medicare benefits
- Some Medicare Advantage plans have a built-in Part D drug plan
- You pay a monthly premium to an insurance carrier for your Part D plan. In return, you use the insurance carrier’s network of pharmacies to purchase your prescription medications. Instead of paying full price, you will pay a copay or percentage of the drug’s cost. The insurance company will pay the rest.
Below is the current Prescription Drugs Statistics in our Nation (according to Kaiser as of 2019):
- 58% of Seniors are currently taking at least one prescription medicine
- 27% say they take four or more prescription drugs
- 35% of those taking 4 or more prescription drugs say it is difficult for them to be able to afford prescription medication
- 30% claim they did not take any prescription medication as directed due to cost
- 45 Million beneficiaries have prescription drug coverage through medicare
- 20.6 Million are in Stand-Alone Part D plans as a supplement to traditional Medicare
- 17.4 Million are enrolled in a Medicare Advantage Prescription Drug Plans
In 2020, Medicare Part D members are facing a relatively large increase in out-of-pocket drug costs before they qualify for catastrophic coverage. This is due to the expiration of the Affordable Care Act provision that constrained the growth in out-of-pocket costs for Part D members by slowing the growth rate in the catastrophic threshold between 2014 and 2019. For 2020, the out-of-pocket spending threshold will increase by $1,250, from $5,100 to $6,350.
Part D members will also face higher out-of-pocket costs in 2020 for the deductible and in the initial coverage phase, as they have in prior years. The standard deductible is increasing from $415 in 2019 to $435 in 2020, while the initial coverage limit is increasing from $3,820 in 2019 to $4,020 in 2020. For costs in the coverage gap phase, beneficiaries will pay 25% for both brand-name and generic drugs, with plans paying the remaining 75% of generic drug costs—which means that, effective in 2020, the Part D coverage gap will be fully phased out. For total drug costs above the catastrophic threshold, Medicare pays 80%, plans pay 15%, and members pay either 5% of total drug costs or $3.60/$8.95 for each generic and brand-name drug, respectively.
Again, enrollment in Medicare Part D plans is voluntary, with the exception of seniors who are eligible for both Medicare and Medicaid and certain other low-income beneficiaries who are automatically enrolled in a prescription drug plan if they do not choose a plan on their own. Unless you have drug coverage from another source that is at least as good as standard Part D coverage also known as “creditable coverage”, you could face a penalty equal to 1% of the national average premium for each month you delay enrollment.
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