The Medicare Prescription Drug Plan (Part D)

Medicare Part A and Part B provide seniors and disabled Americans needed medical care and health insurance — but they don’t provide any coverage for prescription drugs.

That changed when the Medicare Prescription Drug, Improvement and Modernization Act was passed in 2003. It created Medicare Part D, which offers affordable prescription drug coverage for any American with Medicare.

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How Does Part D Work?

Medicare Part D was created by the federal government, but the actual prescription drug benefits are administered by private insurance companies.

During an open enrollment period, you can purchase a Part D plan from any providing insurance company. If you already have drug coverage, you can switch plans for the next year.

The Part D open enrollment period is every year from October 15 to December 7.

There are two ways to enroll in a Medicare drug plan:

  • Enroll in a stand-alone Prescription Drug Plan (PDP) if you have Medicare Part A and Part B coverage.

If you choose a Medicare Advantage plan, your medical and drug coverage is provided by a private insurer rather than the government.

Part D Cost and Coverage

One of these payment "models" determines how you pay for your Part D plan and each prescription:

  • For most drug plans, you'll responsible for a monthly premium — then pay copayments for prescriptions. These kinds of plans do not require you to meet an annual deductible.
  • Other Part D plans require you meet a standard deductible of $275. After the deductible, you'll be responsible for 25% of your drug costs.

The average monthly premiums of Part D plans are about $37. But the exact cost and coverage will depend on your insurance company.

Remember: it’s up to the insurers administrating the plan to decide which drugs to cover. Part D plans can also vary in cost and coverage depending on the insurance company. So make sure the plan you choose covers the medications you rely on at the right price.

How can you find out which drugs are covered? The plan’s formulary.

The Medicare “Donut Hole”

Part D plans cover prescription drug costs until you’ve reached $2,400 in prescription drug costs. When you meet this amount, your plan doesn't pay for anything until you reach $3,850.

In other words, once you hit your benefits limit of $2,400, you'll have to pay $1,450 out-of-pocket for medications until coverage restarts. From there, your plan will cover up to 95% of the rest of your drug costs.

This gap in coverage is commonly known as the "Donut hole."

Comparing Prescription Drug Plan Options

When you're ready to explore your Medicare Part D or Medicare Advantage options, use our free service. Get connected with agents in your area and explore your options with a licensed professional. Just fill out a simple form to get started.

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