What is the Medicare Coverage Gap Discount Program?

Drug manufacturers that make brand-name prescription drugs must sign agreements with Medicare to participate in the Medicare Coverage Gap Discount Program and offer discounts on brand-name drugs to people who’ve reached the coverage gap. This means that 50% of the cost of the drugs will be covered by the drug manufacturer and you and the Part D plan will pay a percentage. You can get these savings if you buy your prescriptions at a network pharmacy or order them through the mail. By the year 2020, the coverage gap will close and you will pay 25% for these covered drugs (including the dispensing fee), the manufacturer will pay 50% and the Part D plan will pay 25%.

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What is the difference between a copayment and coinsurance?

A copayment is the fixed amount that you pay for each prescription depending upon the formulary tier it is on. Usually the lower tiers on a plan’s formulary have copayments. The higher tiers on a plan often have coinsurance because of the high cost of those drugs. Coinsurance is a percentage of the cost of a medication and can vary for each medication you fill.

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What is a Health Reimbursement Arrangement (HRA)?

An HRA is a type of employer-funded health benefit plan that reimburses employees for out-of-pocket medical expenses. These accounts are funded by the employer and unused dollars remain with the employer . It’s a good idea to call your employer first before you switch to another plan.

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Will I lose my VA coverage if I have Medicare Part D?

No, you can have prescription drug coverage from both Medicare and Veterans Affairs. You can get covered drugs under either program, but the two will never combine to pay for the same prescription. For more information, call VA Benefits at 1-800-827-1000.

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What is the Part D Income-Related Monthly Adjustment Amount (IRMAA)?

If your earnings exceed a certain amount, you will pay an additional premium called Part D – IRMAA. IRMAA premiums start when an individual hits $85,000 in income, or when a couple filing a joint return has an income of more than $170,000. The Part D – IRMAA premium ranges from $12.70-$72.90. Read more here.

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How much will I pay for my medications?

What you pay for your medications will depend on the drug tier your medication falls on. Most plans have 4 or 5 tiers (or levels). Your cost-share (copayment or coinsurance) for each tier is determined by your plan. Drugs in Tiers 1 and 2 are typically generic drugs that will be lower in cost and have a fixed cost or copayment. Brand-name and specialty medications will be in higher tiers and require you to pay a coinsurance amount. This is usually a percentage of the drug cost and depending on the tier and the medication what you will pay can vary.

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What is a deductible and how does it work in a Part D plan?

The deductible is the amount you are required to spend for your medication before your plan begins to pay their share.  If the plan you choose has a $400 deductible you will pay the full cost of your prescriptions until you’ve paid $400.  Once you’ve met the deductible, you will be responsible only for the copayment or coinsurance required on future prescriptions.  Not all Part D plans have a deductible. Learn more about Medicare plan costs here.

For more information about deductible costs and how they’ve changed in 2020, click here

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How much does a Medicare Part D plan cost?

You should consider all aspects of a plan before enrolling. Sometimes a low monthly premium is associated with high deductibles, high copayments (fixed out-of-pocket costs), or coinsurance (a percentage of the cost of a medication). However, plans with higher premiums may offer added benefits like $0 deductibles, preferred pharmacy networks, lower copayments, and/or discounts for using a home delivery pharmacy. The size of a plan’s drug formulary (the list of covered drugs) contributes to a plan’s cost. A plan with a smaller, limited formulary is likely to have a lower premium. However, that also means that you could end up paying a great deal of money if you need a medication that is not on their drug list. Lastly, the level of customer service provided is also reflected in a plan’s cost. Plans that offer specialized Medicare advisors may cost more, but those plans provide you with access to a higher level of specialized service.

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