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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 was changed in the Fall of 2019, and improvements have since been made to the tool. However, agents can’t save clients’ drug information for future use and it’s difficult to answer clients’ “what if” questions. In recognition of these limitations, we utilize a different software program that permits us to answer such questions and make other iterations that are helpful to clients in making their drug plan choices.

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 2021 the Part D coverage gap ("donut hole") begins when total drug costs reach $4,130 ($4,430 in 2022) and ends when TrOOP reaches $6,550 ($7,050 in 2022). 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 when they enter the donut hole.

In determining how you get into the coverage gap, you count the total cost of the drugs [both what you pay (excluding premiums) and what the carrier pays. In determining 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 biosimilars) and any benefits paid through State Pharmaceutical Assistance Programs (SPAP’s)].

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 $6,550 in true out-of- pocket costs ("TrOOP") in 2021 ($7,050 in 2022), you're out of the coverage gap and automatically qualify for "catastrophic coverage." Once you qualify for catastrophic coverage you pay the greater of (1) 5% or $3.70 ($3.95 in 2022) for generic drugs or (2) 5% or $9.20 ($9.85 in 2022) for brand-name drugs.

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 are 70% and are also applicable to biosimilar drugs.

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 2021 And 2022?

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

  2021 2022
Deductible $445 $480
Coinsurance During the Initial Coverage Limit stage 25% 25%
Coverage Gap (Donut Hole) $4,130 $4,430
Coinsurance for Generic and Brand-Name Drugs During the Coverage Gap 25%/25% 25%/25%
Catastrophic Coverage Starts When TrOOP Reaches $6,550 $7,050
Cost of Brand-Name Drugs During the Catastrophic Stage Greater of
5% or $9.20
Greater of
5% or $9.85
Cost of Generic Drugs During the Catastrophic Stage Greater of
5% or $3.70
Greater of
5% or $3.95

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 Was The Donut Hole Phased Out For Part D Plans?

As part of the changes made by the Affordable Care Act, the donut hole began being phased out beginning in 2011 and was considered totally phased out as of 2020. Starting in 2020, beneficiaries pay 25% for both brand-name and generic drugs when they reach the donut hole (formally referred to as the “coverage gap”).

Since the phase-out of the donut hole is tied to the “standard benefits model” (see FAQ 8, above), by definition the donut hole is considered fully eliminated. Note: the standard benefits model permits a deductible of $445 ($480 in 2022) and 25% co pays for generic and brand-name drugs during what is called the initial coverage phase of a drug plan; many HMO Medicare Advantage Prescription drug plans have no deductible at all and many stand-alone prescription drug plans and PPO Medicare Advantage Plans limit their deductibles to tier 3, 4, and 5 drugs; and most drug plans actually have co pays lower than 25% for tier 1, 2, and 3 drugs during the initial coverage phase. In these cases, plans can retain their present structures prior to the donut hole but must charge 25% co pays for brand-name and generic drugs (unless they provide “gap coverage”) in the donut hole, so the point is that drug coverage during the deductible and initial coverage limit phases of a drug plan can be different than what they are in the donut hole.

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 ($33.06 for 2021 and $33.37 for 2022 respectively). 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. The calculation is rounded off to the nearest $.10. This is a lifetime penalty for as long as you have Part D coverage and is a monthly penalty

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. See FAQ 9 in the Medicare Overview section for details. Click here for the 2022 Part D IRMAA Schedule.

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

Here are a number of ways you can save on drug costs.

In addition, this article by Bankrate contains a number of good suggestions. Bankrate suggests looking into patient assistance programs at www.rxassist.org (this site contains a wealth of other useful information); shop around for the best prices on medications; tread carefully using current credit cards (look closely before choosing to use a medical credit card), and talk to your physician about switching to generics.

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 www.medicare.gov. Your copy of Medicare & You 2022 also contains a listing of 2022 plans available in your general area. You can also contact us at 877-734-3884 or 561-734-3884 for this information.

15. What Is The Insulin Savings Program?

Beginning in 2021 special provisions were added to some stand-alone Part D drug programs and some Medicare Advantage Drug Programs to decrease the cost of certain insulins. This program is called the “Insulin Savings Plan” and more carriers are adopting this program for 2022. Insulins (not all insulins are included) in this program can be in either tiers 1, 2, or 3 and can’t cost more than $35 for a 30-day supply. With some plans insulin pens for some insulins are also included. These co pays continue into the coverage gap (donut hole).

A very few carriers have also included expensive non-insulin medications like Ozempic into their plans with tier 3 co pays. If you’re a diabetic please contact us at 561-734-3884 or 877-734-3884 for more information.

2022 Schedule
Affordable Care Act Open Enrollment

Open enrollment for 2022 ACA plans runs from November 1, 2020 through January 15, 2022 on the federal facilitated marketplace.
You do not need to have a “qualifying life event”
to qualify during open enrollment.

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


2022 Schedule
Medicare Annual Enrollment Period

Medicare Annual Enrollment begins October 15, 2021 and
ends December 7, 2021 for a January 1, 2022 effective date.

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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