Medicare Part D Costs
The Cost of Medicare Part D
The total cost for Part D will depend on the following factors:
- The plan’s specific monthly premium and deductible
- If the prescription drug coverage is a stand-alone Part D plan or as part of a Medicare Advantage Drug Plan (MAPD)
- If the individual receives financial assistance from the Extra Help program
- The medications each individual takes and how often they are refilled
- The pharmacy used
- If the medication is covered under the plan’s drug formulary
Part D Premiums
Similar to Part B premiums, Part D premiums may be increased for individuals with high income. Those who earn over $85,000 as a single person or $170,000 as a married couple will experience an increase in their premiums.
If an individual delays their Part D enrollment and does not have any other creditable prescription coverage, a penalty will be added to their premium. This penalty is calculated by multiplying 1% with the national base beneficiary premium, which is currently $33.06. The result is then multiplied by the number of months the individual went without Part D coverage. This penalty will continue to apply as long as the Part D plan remains in effect.
Even if an individual obtains their prescription drug coverage through a Medicare Advantage Drug Plan, they will still be required to pay the penalty to receive benefits.
Premiums for Part D plans will vary based on the specific plan and may also be subject to penalties and high-income adjustments. There is no fixed premium for all Part D plans, but on average, the cost is around $40 per month. Individuals who require few or no medications will have a lower premium.
Premium Income Brackets
Individuals whose income is below $85,000 and couples whose combined income is below $170,000 will not have an extra amount added to their Part D plan premium. However, those earning between $85,001 and $107,000 as individuals or $170,001 and $214,000 as couples will be required to pay an additional $12.40 towards their Part D plan. As income brackets continue to rise, the highest earners will have to pay an additional $77.90 per month for their Part D plan.
Part D Deductibles
In 2023, the highest deductible allowed for any Part D plan is $505. However, the deductible may not be applicable to all medications. If the deductible applies, the member will be responsible for paying the entire amount for the prescription until the deductible is met. Once the deductible is met, the member will only be required to pay the copay or coinsurance amount, which is determined based on the tier in which the drug is classified.
Part D Drug Formularies & Drug Tiers
Every Part D plan, including the prescription plans that are part of a Medicare Advantage plan, has its own drug list, which is referred to as the formulary. A drug formulary comprises a list of covered medications and the tiers they belong to. All prescription drug plans are obligated to provide coverage for a specific list of drugs, while also excluding any medications that lack FDA approval.
To illustrate, let’s consider some examples of drugs that are typically covered and excluded by these plans.
Covered medications typically include:
- Most vaccines
- Insulin and the equipment to administer it
(gauze, syringes, needles, and alcohol swabs)
- Prenatal vitamins
Non-covered medications typically include:
- Over-the-counter medications
- Drugs to treat erectile dysfunction
- Fertility medications
- Vitamins or minerals unless otherwise noted in the plan
- Medications for common colds and coughs
- Weight loss or weight gain medications
- Medications used for cosmetic purposes
Once covered drugs are identified, they are grouped into different tiers. Typically, common generic medications are placed in lower tiers and are associated with lower costs compared to those in higher tiers. It’s also common for medications in the first tier to be exempt from the plan’s deductible. On the other hand, specialty name-brand medications are placed in higher tiers, which tend to have higher coinsurance costs. However, the definitions of these tiers are not uniform across all plans, although approximately 95% of Part D plans and 76% of MAPD plans employ similar definitions to classify covered medications. The cost of a specific drug will depend on the tier into which it falls. In general, the higher the tier, the higher the cost of the drug.
The five prescription drug tiers are as follows:
- Preferred generics
- Preferred brands
- Non-preferred drugs
- Specialty drugs
Make Late Part D Premium Payments
Medicare has established guidelines regarding missed and late payments, although it is ultimately at the discretion of each individual plan to determine how to handle late payments.
As per the regulations established by the Medicare program, if a premium payment is overdue, the individual can still receive coverage without incurring a penalty. They will also be granted a grace period and receive alerts and notifications regarding their late or missed payments. Medicare will send a letter by mail instructing the beneficiary to contact their plan’s carrier regarding the payment.
Regardless of the carrier, individuals must be notified before being dropped from the plan. A grace period of at least two months must be granted, but some plans may offer a more extended grace period. The grace period will commence on the first day following the due date of the payment.
Part D Disenrollment
Some plans may have a Single Grace Period policy, which means that individuals who miss one or more premium payments during the grace period may be disenrolled. The individual’s coverage will be terminated at the end of the designated timeframe.
Plans that offer a Rollover Grace Period allow members to remain enrolled if they owe more than one month’s premium but pay at least one premium during the grace period. In such cases, a new grace period will begin. However, if no payment is made, the carrier may disenroll the individual from the plan.
Insurance companies are obligated to notify members who have failed to pay their premiums but will terminate the coverage of any member who fails to make a payment during the grace period.
If an individual has been disenrolled from a plan, they will be required to reapply for coverage.
Medicare Part D Enrollment
When it comes to selecting a Part D plan, there are various factors to consider. However, you don’t have to navigate this process by yourself. Our agents can help you compare plans from multiple carriers to find the most suitable plan for your needs and budget.
Enrolling in a plan is an easy process with our assistance. We will complete the required paperwork, and you can select your preferred payment method for the premium. Once that is done, we will submit the application on your behalf. It is crucial to remember that plans can adjust their coverage, so we need to review your coverage annually to ensure it still meets your needs.