Understanding Part D Coverage
In order to understand prescription drug plan enrollment, it’s important to learn about its four phases of coverage, which include:
Deductible Phase (if applicable)
Donut Hole Phase
Part D - Prescription Drug Coverage (Optional)
Medicare prescription drugs (Part D) coverage helps pay for your prescriptions. Coverage is not automatic. You can purchase stand-alone Prescription Drug Plans (PDP) available through private insurance companies under contract with Medicare. If you do not have prescription drug coverage from your current or former employer or through Part C (Medicare Advantage plan) MA coverage, you should consider enrolling in a PDP plan as soon as you are eligible to get benefits.
This is offered to everyone on Medicare Part A and/or B.
Even if you are not taking many prescriptions, you should consider enrolling in a PDP plan to avoid a Late Enrollment penalty. If you have drug coverage elsewhere, such as through a group plan, VA, or other creditable coverage, you may forgo PDP coverage. You may then enroll in a PDP plan at a later time with no late enrollment penalty. You may enroll in a PDP plan during Initial Enrollment, Annual Enrollment, and Special Enrollment periods.
You may change your PDP plan each year during the Annual Enrollment Period (Oct. 15 – Dec. 7 for a January 1 start of the next year).
Stage 1: The Deductible Phase (You Pay 100%)
You begin this payment phase when you fill your first prescription of the year. You pay the total cost of your drugs until you've met your plan's annual deductible. Medicare Part D costs may change during the year. Some plans have no deductible. After you reach your deductible amount, Part D will then cover the cost of your medications. Although deductible expenses will vary between plans, as of 2023, no plan may exceed $505.00. However, some plans have deductibles as low as $0.00.
Stage 2: The Initial Coverage Phase (Shared Cost With the Insurance Company)
Once you've met your annual deductible, you move into the INITIAL COVERAGE phase. The initial coverage phase is the second phase of Part D coverage. Beneficiaries are responsible for the costs of any copayments or coinsurance. Meanwhile, your plan will pay its share of the cost. As of 2023, the initial coverage phase stops once (what you AND Plan pays) reaches a combined total drug cost of $4,660.00 (including deductible).
Stage 3: The Donut Hole Phase (Coverage Gap)
Once you (and your plan) together have reached a combined total drug cost spend of $4,660.00, you enter the COVERAGE GAP. Once you’re in this period, you may pay more for your drugs. During this payment phase in 2023, you'll pay 25% of generic drug costs and 25% of brand name drugs. You remain in the “Donut Hole” until your personal total out-of-pocket costs reached. In 2023, this amount is $7,400.00.
Stage 4: Catastrophic Coverage Phase
Once your total out-of-pocket costs reach $7,400.00, you move into the CATASTROPHIC PHASE. In this phase, you pay a small copay or coinsurance and your plan pays the rest. For 2023 you'll pay $4.15 for generic drugs / $10.35 for brand-name medication, or 5% of the drug cost, whichever is higher. You remain in this final phase through the remainder of the calendar year.
( TTY users should call 1-877-486-2048), 24 hours a day / 7 days a week or consult Medicare.
What should I consider when selecting my Medicare Plan?
Call Hendricks Insurance today for your answers at (919) 473-6728.
We/I do not offer every plan available in your area. Currently, We/I represent organizations which offer products in your area.
Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options.
Part D Late Enrollment Penalty
Part D plans are optional; however, doctors and insurance agents both recommend you have a plan. Remember, failing to enroll in Part D could result in penalty charges, and those penalties accumulate over time. The longer you delay enrollment, the more you’re going to pay late fees. Buying coverage sooner rather than later will protect you from late fees.
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Medicare Calculates the Penalty As Follows:
1% of the national average base Part D premium for every month that you went without or had no other creditable coverage. Rounded to the nearest $.10, the penalty is in addition to your new Part D premium.
Depending on how long you delay enrollment, it determines the cost of the penalty charge. The exception is if you had another Part D plan equal to or better than Part D. In such a case, Medicare waives the penalty.
Let us help you determine the best PDP plan for you according to the medications you are taking and the pharmacy you use.
Contact us today for more assistance at (919) 473-6728.
Your monthly premium varies by the PDP plan. If your income is above a certain limit, you will pay an extra amount in addition to your PDP plan premium. The extra amount is usually deducted from your Social Security benefit or paid to Medicare, not to your PDP plan.