What are the different stages in a Part D plan?

There are 4 stages to a Medicare Part D prescription drug plan.

• Deductible: You pay the full amount for your medications until you meet the deductible amount and your plan begins to pay its share of the cost for your covered drugs.
• Initial Coverage: Once you meet the deductible amount, you pay either a copayment or coinsurance for your medicines (depending on the drug tier they are on) and the plan pays the rest until you and the plan together meet an amount set by Medicare. This amount changes each year.
• Coverage Gap: The third stage of a standard Part D plan begins after you and your plan together exceed the amount set by Medicare. In this stage you will pay more for your covered drugs until you reach a certain amount, again set by Medicare. Your deductible, coinsurance and copayments all count towards getting you out of the Gap. The coverage gap is closing and each year the amount you pay for brand-name drugs will go down until it is 20%
• Catastrophic Coverage: Once you get out of the Gap, you automatically get “catastrophic coverage.” In this last stage of a Part D plan you pay a small copayment or coinsurance for covered medications for the rest of the calendar year. you fulfill the deductible amount and your plan begins to pay its share of the cost for your covered drugs.

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What is Prior Authorization?

Certain prescription medicines or treatments have rules that require that you to get approval or precertification from the plan before the plan will agree to cover the drug or treatment. In situations where your medication or treatment requires a prior authorization you will need to ask your doctor to contact the plan directly with the medical reasons why you need the medication or treatment covered. Make sure to check your plan’s formulary or summary of benefits to see if you need a prior authorization (PA) before you are treated or fill your prescription to avoid any delays.

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Are there ways to avoid the Coverage Gap?

There are ways to effectively delay reaching the Coverage Gap or “donut hole.” You enter the Coverage Gap when your total prescription costs (your deductible and copayments in the initial coverage stage plus what the plan pays) exceed the amount set by Medicare each year. The best way to delay reaching the gap is to keep your pharmacy costs down. Here are some ways you can do this:

  • Use generic medications when available and appropriate for you. Generics cost a fraction of the price of their brand-name counterparts, and many Medicare Part D prescription drug plans (PDP) offer $0 or low copayments when you use a generic medication. Talk to your doctor or call your plan and ask for help in finding lower-cost alternatives for your brand-name medications.
  • Take advantage of a home delivery pharmacy for your long-term medications and use a preferred pharmacy when possible. Choosing a preferred pharmacy helps to lower your costs.


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What is Medicare Supplement Insurance?

Medicare Supplement Insurance, also called Medigap, are plans offered by private companies that help cover some costs not paid by Original Medicare (such as deductibles and copayments). There are 10 supplemental plans that offer a variety of additional options. Get more information on choosing the right Medicare plan here.

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What are the benefits of enrolling in Original Medicare and adding a Part D plan vs. enrolling in a Medicare Advantage Plan?

With Medicare, you have many opportunities to choose plans that best suit your needs and your budget. Enrolling in Original Medicare (Parts A and B) and then selecting a stand-alone Medicare Part D plan allows you to choose a prescription drug plan that better meets your prescription drug and financial needs. Some plans offer a broader list of covered medications, cost-saving preferred pharmacy networks and/or convenient home delivery.

A Medicare Advantage Plan with prescription drug coverage can offer the convenience of having all your health and prescription coverage bundled under one provider. However, this convenience may result in less choice and less opportunity to ensure the plan meets all your prescription drug needs.

Whichever plan you choose, it’s important to know that if you don’t enroll in Medicare when you become eligible, you may end up paying more down the road. That is because Medicare’s late-enrollment penalties are not a one-time charge but rather, are penalties that can raise your monthly premium(s) for years or possibly for life. Check this article for more information.

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What is the Part D Coverage Gap (“donut hole”)?

In a Medicare Part D plan, Stage 3 is called the Coverage Gap or the “Donut Hole.” You enter this stage after you and your drug plan together have spent an amount set by Medicare for your covered drugs. You continue in this stage until your out-of-pocket costs reach another amount set by Medicare. This amount includes your deductible, coinsurance and copayments in the Initial Coverage stage, the manufacturer’s discount you get on covered brand-name drugs in the Gap; and what you pay for medications while in the Gap. To learn more about the stages of Medicare Part D here.

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Who is eligible for Medicare Part D?

Part D is available to everyone with Medicare to help cover the cost of prescription drugs not otherwise covered by Medicare Parts A and B. If you are age 65, and eligible for Medicare Part A and/or enrolled in Part B, and a citizen or permanent resident of the United States you are eligible to enroll in a Part D plan. If you do not enroll in a Part D plan when you first become eligible for Medicare you may have to pay a late enrollment penalty for as long as you have Part D coverage. Read more about Medicare penalties here.

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