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Medicare Prescription Drug Plan (Part D) FAQs

Medicare Overview FAQ

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1. When Can I Enroll?

Unless you're eligible for a Special Election Period, you must enroll in a Part D Prescription Drug plan:

  • During your Initial Coverage Period (the period beginning three months before and ending three months after your 65th birthday month); or
  • During the Annual Election Period which runs from October 15-December 7 for a January 1 enrollment.

Note: Medicare begins the first of the preceding month for individuals whose birthday is the first day of the month.

2. Can I Purchase A Separate Part D Plan With A Medicare Advantage Plan?

Some plans (called "MAPD" plans) include prescription drug coverage while others (called "MA" or "MA Only" plans) do not.

If you purchase a Medicare Advantage HMO or PPO plan without prescription drug coverage, you CAN'T purchase a separate Part D plan. You can purchase a separate Part D plan with a PFFS (Private Fee for Service plan) that doesn't provide drug coverage and with certain other types of plans.

You can also purchase a Part D plan with a Medicare Supplement plan or with Original (Fee for Service) Medicare (i.e. without enrolling in either a Medicare Supplement or Medicare Advantage plan).

3. How Do Part D Plans Generally Work?

Typically you pay a monthly premium to be covered under the plan. (Some zero premium Medicare Advantage plans include Part D coverage with no additional premium.)

Also, you should be aware of variations in the coverage and cost sharing associated with plans. Coverage generally follows this pattern:

  • If the plan has a deductible, you pay the full amount of your prescription drug purchases until the deductible is met.
  • After you satisfy the deductible (if any), you'll pay a share of the costs according to the terms of your plan. This part of the plan is called the "Initial Coverage Limit."  Your share, which you typically pay to the pharmacy at the time of pickup (or to your mail order pharmacy), could be a flat amount (co pay) or a percentage of the total amount (coinsurance).
  • Once your costs reach a certain amount (this is called entering the "coverage gap" or the "donut hole") your cost share will change.
  • When you've paid a certain annual maximum amount out of your own pocket [the 70% manufacturer's discount received during the coverage gap and certain other items are also included in this calculation which is referred to as “True Out-Of- Pocket Costs ("TrOOP")], you automatically qualify for "catastrophic coverage." This means you will only pay a small co pay or coinsurance amount for prescription drugs during the rest of that particular year.

4. Aren't All Part D Plans The Same?

Although they must meet minimum Federal guidelines (called the Part D "standard benefit model"), many Part D plans provide more liberal benefits.

Part D plans differ markedly between carriers, and one of the most important differences is which drugs are covered and which are not. This is a particularly important consideration for individuals who have been prescribed expensive medications.

quick-tip Each carrier provides a formulary that lists which drugs are covered under that plan and which co pay or coinsurance tier the drug falls into. Subscribers should always check the formulary to determine if their drugs are covered--and at which co pay or coinsurance rate--before purchasing a plan. It's also a good idea to review your Medicare prescription drug coverage every year to see if your plan covers the medications you need now and may need in the upcoming year.

Be sure to talk to your doctor to see if you're taking the lowest cost medications available to you.

Specific coverage may vary from plan to plan, so read your documentation carefully.

5. What Is A Formulary Finder?

Medicare (CMS) publishes a formulary finder on their website that permits you to enter your medications, dosages, and frequency of use and then lists the carriers that cover these medications in their formulary. After you enter your drugs into the formulary finder there are various options as to how to present the findings: i.e. list in order of plans with the lowest premium; list in order of lowest premium AND cost of drugs; and list in order of plans with the lowest deductible.

Note: the formulary finder that had been used for the last 10 years was revised shortly before the start of the 2020 Annual Enrollment Period. The new formulary finder is still being improved but contains some errors. As a result, you may make decisions on buying a drug plan based on incorrect data if you rely on the formulary finder and do not recognize where these errors occur. Accordingly, we suggest you call us at 877-734-3884 or 561-734-3884 for help in using the formulary finder. We cannot guarantee complete accuracy but with our experience can spot errors, bring them to your attention, and suggest how you might want to adjust the formulary finder results. Also, many carriers are suggesting that you use their sites—rather than the formulary finder—to obtain accurate costing data for their plans.

6. How Are Medications Covered In The Coverage Gap (Donut Hole) And How Does That Differ From How Drugs Are Covered In The Initial Coverage Stage Before I Reach The Donut Hole?

For 2020 the Part D coverage gap ("donut hole") begins when total drug costs reach $4,020 and ends when TrOOP reaches $6,350. Note that total drug costs and TrOOP are two different calculations. Regular co pays stop during the coverage gap. Instead, beneficiaries pay 25% for both brand name and generic drugs in 2020.

In determining how you get into the coverage gap, you count the total cost of the drugs [both what you pay and what the carrier pays (excluding premiums)]. In counting how you get out of the coverage gap, you count TrOOP [generally what you pay (excluding premiums) plus manufacturers' discounts (70% for brand name drugs) and any benefits paid through State pharmaceutical assistance programs (SPAPs)].

Some carriers offer drug plans that increase entry into the coverage gap to a higher amount. Also, some drug plans provide what is called "gap coverage" [i.e. some co pays (usually for tier 1 and 2 generic drugs) are continued during the donut hole].

7. What Is Catastrophic Drug Coverage And How Do I Become Eligible?

Once you've spent $6,320 in true out-of- pocket costs ("TrOOP") in 2020, you're out of the coverage gap. When you get out of the coverage gap, you automatically qualify for "catastrophic coverage." Once you qualify for catastrophic coverage you pay the greater of (1) 5% or $3.60 for generic drugs or (2) 5% or $8.95 for brand-name drugs in 2020.

All amounts you pay for medications as well as the manufacturer's discount that applies to brand-name drugs during the coverage gap (also called the "donut hole") count as "TrOOP" ("true out of pocket cost"). Manufacturer's discounts were increased from 50% to 70% beginning in 2019 and these discounts were also made applicable to biosimilar drugs at that time.

Note that one set of calculations (total drug cost) determines how you ENTER the coverage gap; another set of calculations (TrOOP) determines how you GET OUT of the coverage gap and enter catastrophic coverage.

8. What Are The Changes To The Part D Standard Benefit Model For 2019 and 2020?

Medicare drug plans must meet or exceed what is called the “standard benefit model” or its actuarial equivalent.   

  2019 2020
Deductible $425 $435
Coinsurance During the Initial Coverage Limit stage 25% 25%
Coverage Gap (Donut Hole) $3,820 $4,020
Coinsurance for Generic and Brand-Name Drugs During the Coverage Gap 37%/25% 25%/25%
Catastrophic Coverage Starts When  TrOOP Reaches $5,100 $6,320
Cost of Brand-Name Drugs During the Catastrophic Stage Greater of
5% or $8.50
Greater of
5% or $8.95
Cost of Generic Drugs During the Catastrophic Stage Greater of
5% or $3.40
Greater of
5% or $3.60

Note: plans are permitted to provide more liberal benefits than those required by the standard benefit model.  For example, plans can have lower or no deductibles; co pays or lower coinsurance; cover certain drugs at the Initial Coverage Limit level during the coverage gap; and are also permitted to offer supplemental benefits that cover certain drugs not covered under Part D, such as erectile dysfunction drugs.  Plans are permitted to have higher coinsurance for at least some benefit tiers during the Initial Coverage Level if the total benefits under the plan are at least actuarially equivalent to the Standard Benefit Model.

9. How is the Donut Hole Being Phased Out for Standard Benefit Model Part D Plans By 2020?

The following shows how the donut hole is being phased out (the phase out began in 2011) from 2018 to 2020:

  • 2018: 35% for brand-names and 44 percent for generics
  • 2019: 25% for brand-names and 37 percent for generics
  • 2020: 25% both for brand-names and generics

Since the phase out of the donut hole is tied to what is called the “standard benefits model” (this model permits co pays of up to 25% for generic and brand name drugs) by definition the donut hole is considered fully eliminated in 2020 (the donut hole was considered eliminated for brand-name drugs in 2019 because co pays for brand name drugs during the coverage gap were limited to 25% last year). Note: the standard benefits model permits a deductible of $435 and 25% co pays for brand name drugs in 2020 during what is called the initial coverage phase of a drug plan; many drug plans limit their deductibles to tier 3, 4, and 5 drugs, and most drug plans actually have lower co pays than 25% during the initial coverage phase.

10. What Utilization Management Techniques Are Used By Part D Plans?

Plans are required to include medication therapy management including step therapy, quantity limits and prior authorization. Part D sponsors may substitute generic drugs for brand name drugs if the generic drugs have the same or lower cost sharing and certain conditions are met. In accordance with the Comprehensive Addiction and Recovery Act (CARA), plans may impose certain limitations to manage utilization for beneficiaries who are at risk of misusing or abusing frequently abused drugs, such as opioids.

11. What Is The Penalty For Not Buying A Drug Plan When I Am First Eligible?

You may owe a late enrollment penalty (LEP) if, at any time after your initial enrollment period is over there is a period of 63 or more continuous days when you don't have Part D or other creditable coverage (i.e. coverage that, as a minimum, meets the Part D standard benefit model).

The late enrollment penalty is assessed for EACH month that you haven't had creditable drug coverage.

The amount of the penalty changes annually and is based on each year's national average Part D premium ($32.74 for 2020). The monthly penalty is 1% of that year's national average Part D premium multiplied by the number of months you have not had creditable coverage.

12. What Are The Part D Premium Adjustments For High Income Beneficiaries?

Part D Prescription Drug Plan premiums are adjusted if your income exceeds a certain level. This additional premium (called the IRMAA) will be deducted from your Social Security check and is in addition to your premium for the basic plan. (You will have to pay Social Security directly for any IRMAA payments if you are not drawing Social Security.)

The Bipartisan Budget Reconciliation Act of 2018 changed how IRMAA is calculated in 2019.  See FAQ 9 in the Medicare Overview section for details.  Click here for the 2020 Part D  IRMAA Schedule

13. What Are Some Ways Of Saving On Drug Costs?

14. How Can I Find What Plans Are Available In My Area?

For a complete listing of plans available in your service area please contact 1-800-Medicare (TTY users should call 1-877-486-2048) or go to Your copy of Medicare & You 2019 also contains a listing of 2020 plans available in your general area. You can also contact us at 877-734-3884 for this information

2020 Schedule
Affordable Care Act Open Enrollment

Open Enrollment began November 1, 2019 and ended December 15, 2019
on the federal facilitated marketplace for plans to start January 1, 2020.

Before the next open enrollment period starts you can only enroll
for an Affordable Care Act plan if you have a qualifying life event.

You may be eligible to enroll for another type of plan.
Call us at 561-734-3884 or 877-734-3884 for details.

2020 Schedule
Medicare Annual Enrollment Period

Annual Enrollment began October 15, 2019
and ended December 7, 2019 for a January 1, 2020 enrollment.

You’re eligible to enroll now if you’re first becoming eligible for
Medicare or are eligible for another type of enrollment period.
Enrollment rules differ between Medicare Supplement plans and
Medicare Advantage, Medicare Advantage Prescription Drug,
and stand-alone Prescription Drug Plans.

Call us at 561-734-3884 or 877-734-3884 for details.

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