Anyone who has Medicare Part A or Medicare Part B coverage is eligible for Part D of Medicare coverage. Part D is used to subsidize the costs of prescription drugs for Medicare beneficiaries. Part D was enacted as part of the 2003 Medicare Modernization act and went into effect on January 1, 2006. Medicare beneficiaries can obtain Part D through two types of private plans:  a Prescription Drug Plan (PDP) or a Medicare Advantage Plan (Part C) that covers both medical services and contains a prescription drug plan. Approximately two-thirds of Part D beneficiaries are enrolled in the PDP option.

Eligibility

Those who are entitled to benefits under Medicare Part A and/or are enrolled in part B are eligible for Part D. Beneficiaries are able to obtain the Part D coverage through two types of private plans, more than two-thirds of Medicare recipients are enrolled in the first type of drug coverage.

  • Enrollment in a Prescription Drug Plan (PDP) for drug coverage only
  • Enrollment in Part C – Medicare Advantage  – which covers both medical costs and drug coverage as well.

Generally, not all prescription drugs are covered at the same level – this is designed to give beneficiaries an incentive to choose certain drugs over others – for example generic over brand name. This is implemented through a system of tiered formulas where lower costs drugs are assigned to lower tiers, making them easier to prescribe and at a lower cost.

Duel Eligibility: Some Medicare beneficiaries are deemed to be dual-eligible. This means that they qualify for both Medicare and Medicaid. In this case, the beneficiary has an income which falls below their states qualification guidelines for Medicaid. In January of 2006, those with duel eligibility (receiving both Medicare and Medicaid drug benefits) were transferred from Medicaid to Medicare Part D – through an auto enrollment with one of the least expensive PDPs in their area – which was chosen at random.

Enrollment

Most Medicare beneficiaries must affirmatively enroll in Part D Drug Coverage in order to participate. The current enrollment period runs from October 15th to December 7th , beneficiaries who are eligible for Part D, but do not enroll during the enrollment period, but choose to do so at a later time will pay a late-enrollment penalty in order to receive Part D benefits.  You can find a PDP by using the Medicare Plan Finder.

Coverage

Each Medicare Prescription Drug Plan has its unique list of covered medications – this is referred to as a ‘formulary’.  The medications that the plans cover are placed into tiers within the formulary and the medications placed within the tiers are given a different cost. Medications in lower tiers will cost less than medications in the upper tiers.

If your doctor prescribes you a medication which is on an upper tier and your physician feels that no similar drug on a lower tier is right for you, you or your prescriber can request an exemption which will give you a lower co-pay for that medication. To find out which plans cover your medications, use the Medicare Plan Finder.

With the exception of vaccines which are covered under Medicare Part B, all Medicare Drug Plans must cover all commercially available vaccines, such as the shingles vaccine, when they are medically necessary to prevent illnesses and disease.

Auto-Refill: In the past some Part D beneficiaries used an auto-refill plan, the plan would automatically refill prescriptions, and send them to the beneficiary in the mail. However, some PDP’s weren’t making sure that the beneficiary still needed the medication and pharmacies cannot restock prescription drugs if they are sent through the mail. Some auto delivery services were creating a significant amount of waste and unnecessary costs for the Medicare Part D Program. To resolve this issue, effective January 2014, PDP’s will require your approval, prior to shipping refills – unless you request the refill yourself first.  If you are already on an auto delivery program for your Part D prescriptions, be sure to let your PDP provider know the best way to reach you.  This new policy will not affect those who physically pick up their prescriptions, nor will it apply to long-term care pharmacies.

Coverage Rules:

You may find that many of the Medicare Prescription Drug Plans have some, or all, of the following rules:

  • Step Therapy: Before Part D will cover a higher tiered drug, you must have tried one or more similar lower tiered drugs.
  • Quantity Limit: These limits keep you from being able to get too much of a drug at a single time. For instance, one PDP may only allow you to get your medications on a 30 day supply, while another PDP may allow you a 90 day supply.
  • Authorization: Certain PDP’s will require you and/or your physician to receive prior authorization from your PDP before you fill prescriptions for certain drugs. This would have to be done each time you need a refill. Your prescriber will need to prove that the medication is medically necessary for the plan to cover it.

Coverage Cost

Beneficiaries enrolled in Medicare Part D or prescription drug coverage will make the following payments throughout the year:

  • Premium
  • Yearly deductible
  • Copayments or coinsurance
  • Costs of drugs falling in the coverage gap
  • Costs incurred if you get extra help
  • Costs of a late enrollment fee – if applicable.

Note: Under the Affordable Care Act this gap – otherwise known as the donut hole will be eliminated completely. 50% of the gap was eliminated as of September 2010 and will completely close in 2020.)

The actual drug plan costs will vary depending on the following:

  • Drugs used – and the tier they are on
  • The PDP plan you choose
  • Using ‘in-network’ or ‘out-of-network’ pharmacies
  • Whether the medications you use are on your plans formulary
  • If you receive extra help paying your Medicare Part D costs.

Extra Help with Costs

If you have a limited income and have limited resources, your state of residence may be able to assist you with your Part A and Part B benefits. You can also qualify for extra help paying for your Part D coverage as well. This is called ‘Dual Eligibility’ where you receive both Medicare and Medicaid.

If you meet certain income and resources limits, you may qualify for extra help – from Medicare – to pay for your prescription drugs.  As of 2013, you qualify if you have:

  • Single Person:  Up to $17,235 in yearly income and up to $13,300 in available resources.
  • Married Couple: Up to $23,265 in yearly income and up to $26,580 in available resources.

Resources include:

  • Stocks
  • Bonds
  • Money in checking, savings or on hand. (with the exception of $1,500 for burial expenses if you do not have money already set aside for burial)

Resources do not include:

  • Your Home
  • One Vehicle
  • Burial Plot
  • Up to $1500 for burial expenses if you don’t already have that money set aside *see above
  • Furniture
  • Household and personal items

To apply for extra help with costs through Medicare, click here.

If you don’t meet the criteria above, your state may have programs which can assist you in paying for your medications. Contact your states Medicaid office or your State Health Insurance Assistant Program (SHIP) for more information.  Remember too, that you can reapply for extra help through either Medicare, Medicaid or your State Health Insurance Assistant Program at any time if your income and resources change.

Lower Your Drug Costs

There are ways you can lower the costs of your medications, try any of the following to assist you in lowering your out-of-pocket expenses:

  • Use generic drugs whenever possible and medically safe to do so.
  • When Brand named drugs are a must, ask your doctor if there is a lower cost brand name.
  • Use Mail order pharmacies and whenever possible use the 90 day supply instead of a 30 day supply.
  • Use the Medicare Plan Finder to assist you in finding drug plans with lower out-of-pocket costs.
  • Find out if your state Medicaid or your State Health Insurance Assistant Program can assist you in paying for your drug costs.  Be sure to check the Medicare Websites State Pharmaceutical Assistant Programs search.
  • Find out of the manufacturer of your medications has offers to help pay for your medications.  Through the Medicare websites Pharmaceutical Assistance Program. When searching through the Pharmaceutical Assistance Program, be sure to look up all medications you are taking. The qualifications for assistance change for each and every drug, even within the same manufacturer.