Part D Prescription Drug Plans
Part D (Rx) Prescription Drug Plans
Once enrolled in Medicare you will want to choose supplemental insurance, either (Avenue 1) Medicare Supplement + Part D Rx Plan, or (Avenue 2) Medicare Advantage. This page explains the details of Part D Rx plans.
Part D Prescription Drug (Rx) Plans are insurance plans offered to help cover the cost of prescriptions purchased at a pharmacy, or via mail order. Medicare only covers Rx administered in a hospital or doctor’s office settings. Part D Plans cover prescriptions you may just take for one month or less (ex., an antibiotic), and also ongoing prescriptions (ex., blood pressure medicine).
All Part D Prescription Drug Plan Benefits Follow a Standardized 3 Part Benefit Design
The insurance companies offering the 14 Part D prescription drug plans available in North Carolina design their own plans with unique details, but ALL Part D plans must follow a basic benefits structure as mandated by Medicare. There are 3 “benefit stages” of a Part D plan, and a person covered by the plan may enter each of those 3 parts throughout the plan year based on the total amount of prescription drug costs paid by both the insurer and the insured. The plan year is the calendar year, so the benefits start over each January 1. See below for more details.
“Yearly Deductible” Benefit Stage
Part D prescription drug plans begin the plan benefits in a yearly deductible benefit stage, from the start ($0) of prescription costs paid, up to when the the deductible is met. A “deductible” means that you begin by paying for the cost of prescriptions (the insurer is not) until the deductible is met.
Yearly deductibles via regulations, can range from $0 to $590. Lower premium cost plans have a higher deductible, and higher premium cost plans have a lower, or no deductible.
A deductible sounds daunting, but keep these three factors in mind:
-Most Part D prescription drug plans exclude Tier 1 (preferred generics) and Tier 2 (generics) from the deductible! So copays for generic prescriptions start the first day of coverage. No deductible ever to meet. If you do not take Tier 3 and above (brand name and specialty) prescriptions, you will never see a deductible.
-When you do pick up Tier 3 and above prescriptions in the yearly deductible benefit stage you are not paying the full (retail) cost of the Rx but the discounted cost (the much lower cost the insurance company has negotiated with the pharmacy). This brings your actual cost down to a level much closer to the copay. And insurers make this cost information very transparent…we can figure the cost up front so you know what to expect.
-Insurers add deductibles to lower the monthly premium cost of their plan offerings. Many times it is advantageous to you to choose a plan with a deductible, as the annual premium cost savings are much more than the deductible.
“Initial Coverage” Benefit Stage
Once the deductible state is met the insurance company pays for most of your prescription costs with you just paying a copay (a set amount), or a small percentage of the discounted cost of the Rx. This initial coverage benefit stage looks a lot like how many health insurance plans cover prescriptions.
The copay amount depends on the "tier" the drug is on. A tier is just a list of certain drugs the insurer formulated, (an example, “preferred generics”). Insurers are very transparent with their tiers, making it easy to determine your copay cost or percentage cost under the plan. Here is a tier example with copays from a currently available Part D plan:
-Tier 1 (preferred generic prescriptions): $0 copay for a one month supply
-Tier 2 (non-preferred generic prescriptions): $1 copay for a one month supply
-Tier 3 (preferred brand name prescriptions): $47 copay for a one month supply
-Tier 4 (non-preferred brand name Rx): 38% of the cost for a one month supply
This is just an example. Each company offers differing tier systems and copays.
This copay method of costs continue throughout the plan year, or until your total drug costs (the cost paid by the insurer plus the costs you have paid) reach $2,000. A majority of people stay in the initial coverage benefit stage for the remainder of the plan year.
“Catastrophic Coverage” Benefit Stage
If your total drug costs reach $2,000 before the end of the calendar year you enter the catastrophic coverage benefit state for the remainder of the year. In this benefit stage the insurer pays 100% of all of your prescription costs. You pay nothing.
Then the next January 1, the benefit stages start over again.
Note!
It is important for you to understand these benefit stages and how they work through the plan year. But it feels confusing thinking about this generally!
The good news is that when we look at your specific prescriptions…how they are covered is not this confusing and dense. When we research plans according to someone’s prescriptions and favorite pharmacy, the transparent information on how each specific Rx is covered is simple to understand. Here is a recent example, a client in Chapel Hill who goes to a national chain pharmacy and takes 4 prescriptions each month. We found a plan that covered them this way:
-atorvastatin (tier 1): $0 copay
-duloxetine (tier 1): $0 copay
-famotidine (tier 2): $5 copay
-metoprolol succinate (tier 1): $0 copay
Much simpler to understand. And in this example, very little out of pocket cost!
3 Quick Things to Know About Part D Rx Plans
Pharmacies Nationwide
You do want to visit an in-network pharmacy if you can, to get the best benefits. The good news is that each insurer has built a nationwide network of pharmacies you can utilize. And that network includes both chain pharmacies and local independent pharmacies.
Guaranteed Coverage
There are no health questions to answer or underwriting to be qualified to enroll in Part D plan coverage. You are eligible because you are turning 65, or 65+ and coming off of employer-sponsored health insurance (ex., at retirement), or during the annual enrollment period (Oct. 7 through Dec. 7).
There is a Premium Cost
You will pay a monthly premium cost to have Part D prescription drug coverage, and Part D plan premium costs in the state range from $0 to $113 monthly. Most people we work with choose Part D plans with premium costs in the $0 to $30 monthly cost range. There are 14 plan designs.
The Two Most Important Factors in Determining the Best Part D Rx Plan for You
Many benefits of Part D Rx plans are standardized. But federal rules do not mandate the prescriptions covered by plans, nor the pharmacies that are in-network. We ask for the Rx you take and the pharmacy you prefer to research and determine the best plans based on that information.
Prescriptions on Differing Tiers
The insurance companies offering Part D plans place each covered prescription on a certain tier, a system they choose. If, for example, you take a brand name Rx that is on Tier 3 with one insurer, and on Tier 4 with another insurer….the insurer offering the lower tier ranking may be best (save you money).
In Network Pharmacies
Part D insurers make special deals with pharmacy chains and independents, negotiating lower costs for its members (the discounted costs). There are even in network pharmacies and “preferred” in network pharmacies. Choosing a plan where your pharmacy is preferred will lower your out of pocket costs.
We Work With All of the Part D Prescription Drug Plan Providers, Including:
Free Information Packet and Quotes
Complete the form below and we will send you clear, concise information about Part D Prescription Drug Plans along with quotes to consider from insurance companies. We will compare the plans’ benefits and costs, and recommend what looks best based on your details and preferences.
Note: Privacy is something we take seriously. The minimum of information is shared with an insurance company to put together a detailed free quote and illustration for you.