Medicare Part D Prescription Drug Plans

Medicare Part D also know as Prescription Drug Plans cover certain Prescription Drugs, diabetic supplies, and vaccines. You can only get Medicare Part D through a private insurance company or provider. There are several Part D plans available:

  • Stand-Alone Prescription Drug Plans

  • Medicare Advantage Prescription Drug Plans (MAPD) bundled with Medicare Benefits and Prescription Drug Plans

  • Prescription Drug Cost Plans (not as common) this type covers Prescription Drugs as a supplemental benefit

Who is Eligible?

You must:

  • Be entitled to Part A and/or enrolled in Part B

  • Be a US Citizen or lawfully present (Green Card) in the US before the enrollment date. (CMS Centers for Medicare and Medicaid Services) make the determination

  • Permanently reside in the Part D plan service area. This normally is decided by County residence. Part D insurance companies must enroll any eligible person who applies regardless of health status.

MAPD (Medicare Advantage Prescription Drug plans) are subject to the normal Medicare Advantage eligibility rules and may not enroll certain individuals such as:

  • Not entitled to Part A and Part B

  • Special Needs plans who do not meet the eligibility criteria

  • Generally, persons enrolled in Original Medicare (Part A & B), a Medicare Advantage Medical Savings Account (MA-MSA) a Private Fee For Service (PFFS), or a cost plan may enroll in a standalone Part D

  • Important to remember, if you have a Medicare Advantage HMO or PPO plan and you want you must enroll in the Medicare Advantage PDP.

Covered Drugs

Every Part D Prescription Drug Plan must cover the following:

  • Prescription drugs

  • Biologics—These are drugs made of natural sources that are not chemically synthesized for example some allergy shots or gene therapies.

  • Insulin—Many Medicare Advantage Prescription Drug plans have Insulin Savings Programs

  • Supplies for the injection of insulin

  • Certain vaccines that are not covered by Part B such as Shingles or Tetanus, Diphtheria, and Whooping Cough

What are Formularies?

Not all drugs are covered under Part D (PDP) because in most cases there are similar drugs that are available to treat the same medical conditions. Every Part D plan has a formulary that is a list of drugs. The formulary for each insurance company is developed/designed by pharmacists and doctors.

Every formulary must contain at least 2 drugs in each category of illness or therapeutic category. They must contain both brand names and generic drugs.

Limitations

Not all drugs are covered under Part D Prescription Drug Plans. Here is a list of what is not covered under the Part D plans:

  • Drugs covered under Part A and Part B even if not enrolled in such coverage

  • Off Label Drugs

  • Over the counter or non-prescription drugs

  • ED or Erectile dysfunction drugs

  • Vitamins

  • Fertility Drugs

  • Weight Loss

  • Cosmetic Purposes

  • Cold and Cough Drugs

  • Medical Foods not regulated by FDA

Plan Deductibles

There are some Medicare Advantage Prescription Drug plans that either requires or waive the initial deductible. By 2022 the CMS (Centers for Medicare and Medicaid Services) allow the following deductibles. This can be a bit difficult to understand, but these are the maximum allowable charges according to CMS:

Initial $480 deductible

  • 25% of prescription drug phase—that is between the deductible and initial coverage limit of $4,430, or the actuarial equivalent to an average expected coinsurance of no more than 25% of actual costs during the initial coverage phase.

  • 25% of generic drugs and 25% of the undiscounted cost of brand name drugs during the “Coverage Gap”

  • During this Gap phase, initial drug manufacturers are responsible for 70% of the cost of the drug. This is known as the manufacturer’s discount. Even though individuals do not pay the 70% it still counts toward the maximum out of pocket spending necessary to reach the “catastrophic phase”

  • At the catastrophic phase, the individuals pay a co-pay of $3.95 for generic or $9.85 for brand name or 5% whichever is greater.

Here is an easy way to understand the amounts that an individual might pay:

  • Deductible – Enrollee pays 100%–$480

  • Initial Coverage—Enrollee pays 25% of drug costs

  • Initial Coverage Limit–$4,430 total drug costs

  • Coverage “Gap”—Enrollee pays 25% of Generic and 25% undiscounted costs of brand name

  • $7,050 Total Out of Pocket Threshold Reached

  • Catastrophic Coverage Enrollee pays greater of 5% or $9.85 Brand Name/$3.95 Generic

Part D—Prescription Drug Coverage can be confusing to understand. It is important to discuss your options with a licensed agent to determine what is right for your needs.