Medicare celebrated its 50th anniversary back in 2015, and since its inception in the mid-1960s, the healthcare coverage program has seen some major changes. One of the biggest enhancements to the program came in 2006, when lawmakers created Medicare Part D prescription drug coverage. Not every Medicare participant takes advantage of Part D coverage, but millions of retirees make use of the program to limit their risk and control their costs for prescription drugs. To answer some of the questions that participants often ask about the program, here are some of the key provisions of Medicare Part D and how you can use it to cover the expenses of prescription drugs and medications.
How much does Medicare Part D cost?
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Medicare participants typically have to pay several types of costs in order to be part of a Medicare Part D plan. However, the government agency that oversees Medicare doesn't set fixed amounts for most of those costs. Those who are used to seeing the set premiums that Part A hospital coverage and Part B medical coverage charges under Medicare will be surprised by the wide range of different costs across plans. That stems from the fact that Part D plans come from private insurance companies, and they have considerable latitude to tailor plans to meet the needs of their intended customers as well as to set pricing on their own.
Even with these differences between plans, there are some things that all Part D offerings share in common. Nearly all Part D plans have a monthly premium that participants have to pay. That premium is fixed for each plan, but there are surcharges that those with high incomes have to pay. The table below sets out the income brackets and the additional amount that Medicare tacks on:
Most Part D plans also have an annual deductible. That represents the amount you have to pay out of your own pocket before the plan's provisions start providing coverage. Part D plans can't charge a deductible that's more than $405 in 2018, but you can find many plans that charge less. Some Part D plans don't have any deductible at all.
You'll also typically pay copayments or coinsurance amounts under Part D plans when you actually purchase prescription drugs. Some plans charge a fixed dollar amount, while others make you pay a certain percentage. With some plans, there's a different amount you'll be responsible to pay depending on whether the drug you get is brand-name or generic.
There's also a maximum that Part D plans are allowed to force participants to pay out of pocket. No matter how many prescription drugs you need, the 2018 out-of-pocket limit at which catastrophic coverage provisions kick in to provide 100% coverage is $5,000.
What does Medicare Part D cover?
The biggest challenge in selecting a Medicare Part D plan is that each one can have a different customized list of drugs that it covers. Often, you'll see Part D plans that break down various drugs into categories, with some categories getting the most coverage and offering the lowest costs to plan participants, while others have higher costs but still offer at least some coverage. Again, some plans reward participants for using generic equivalents instead of name-brand drugs by putting them in different categories.
Once a plan lists a drug as being covered, it typically has to cover that drug all year long. In rare situations, plans can make mid-year changes to covered drugs. But you'll always get written notice prior to such a change, and you'll have an opportunity to get refills and obtain a supply of the drug that will last beyond the proposed change date.
Don't miss out on the prescription drugs that you need
Part D is the newest part of Medicare coverage, but it has quickly become an essential part of the program for seniors seeking to control their healthcare expenses. By finding out what a Part D plan will cover and how much it will cost, you'll be in a better position to choose the right plan to meet your specific medical needs.
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