How do I Pay for My Coverage?
The first cost to Part D is a monthly premium, and the amount varies depending on the plan.
Payment for covered prescriptions is handled in four different parts. Your plan may start you with a deductible or in the initial coverage stage. Which stage you’re in depends on pay limits that are established by your plan.
Just like deductibles for Medical Savings Accounts and PPO plans, you are responsible for all costs until the pay threshold is reached. Some plans may not have a deductible, but any prescriptions you fill will be put towards your deductible.
At this level, subscribers pay coinsurance and copayments up to another level. Copays are a common coverage option. They are also used with other types of Medicare Advantage plans such as PFFS plans, PPO plans, and HMO plans.
Copayments are usually a flat fee but will increase in price depending on the drug. For example, generic drugs usually have lower copays, while specialty drugs will have the highest copays.
Coverage gap or “donut hole”
This is the second phase of Part D plans. People enrolled in a Medicare Advantage plan with prescription drug coverage, reach this stage when they hit a certain cost amount. The amount changes from year to year.
As of 2017, people who enroll in Medicare Part D cover 40 percent of the plan’s price for brand-name drugs. In terms of generic prescriptions, subscribers usually cover 51 percent of the plan’s price. However, in 2020 the percentage gap dropped down to 25 percent of prescription drug costs.
In order to get out of the coverage gap, your prescription drugs costs must reach $6,350. This is the coverage checkmark for 2020. Keep in mind that this does not include the costs paid by your plan. Once you pay this amount, you will qualify for catastrophic coverage.
This is the final level of coverage under Part D. Usually, subscribers only hit this level when they face serious medical needs. From here on, the subscriber only pays minimal copayments for prescriptions. The average amount is around 5 percent of the total cost. One reached, these terms last until the coverage cycle restarts at the end of the year.
You will still have to pay monthly premiums and out of pocket from drugs not covered by your plan. This also includes out of pocket costs from pharmacies outside of your plan network.