Understanding you Part D Prescription Coverage

Especially for a lot of Plan F clients where there’s one premium and no out of pocket expenses for medical services, Part D prescription coverage has been difficult to understand.

Here’s a breakdown of Part D Prescription Costs

1.     Monthly Premium

This is how much you pay regardless of whether you use the plan or not.  Different plans have different monthly premiums.  You can pay for your monthly premiums by paying a monthly bill or by getting a direct withdraw from your social security check.

2.     Deductible

This is how much you have to pay before insurance kicks in.  For 2015, the maximum allowable deducible is $320.  Plans can have deductibles that are less than $320 and the deductible can apply to all prescriptions or just brand name prescriptions.  

Some plans may have no deductibles at all.

3.     Co-pays/Co-insurance

After you’ve met your deductibles, you’ll have co-pays (a set dollar amount e.g. $45), or co-insurance (a set percentage) e.g. 33%) for each prescription you refill.

4.     Coverage Gap (Donut Hole)

Once the total costs of your prescriptions for the calendar year (what you pay and what the insurance company pays) reaches $2960 for 2015, then you’ll reach the coverage gap or commonly referred to as the “donut hole.” 

In the coverage gap, you’ll be responsible for 45% of the cost of brand name medications and 65% the cost of generics.  For example, if you have a brand name medication that’s $200, you’ll pay $90 in the donut hole. 

After your out of pocket costs equals $4,700 for the calendar year (meaning what you pay in deductibles, co-pays, and co-insurances in the donut hole), you’ll be in the catastrophic phase where generally you’ll pay 5% for the cost of your prescriptions.

The calculations for the deductible and coverage gap reset on January 1st of every year.

Each plan can change their monthly premiums, deductibles, what prescriptions are covered, co-pays and co-insurances each year.  Make sure to check in October for changes to your plan come January 1st to prevent unpleasant surprises at the pharmacy.

You can check for changes by visiting medicare.gov and using the prescription plan finder tool.