UNDERSTAND MEDICARE
Medicare Part D:
Prescription Drug Plans
Medicare Part D prescription drug plans are provided by private insurance plans under contract with Medicare. If you don't enroll in a Part D plan when you are initially eligible and enroll later, you might have to pay a monthly late enrollment penalty for as long as you have Part D. But if you had "creditable" coverage before your delayed enrollment in Part D, then you would not need to pay a late penalty. "Creditable" coverage is prescription coverage that is at least as good as standard Part D coverage.
Part D Options
There are two types of Part D plans: Combined coverage and Stand-alone coverage.
Combined coverage plans offer Part D coverage in addition to hospital and medical coverage. Examples of these types of plans are Medicare Advantage and Medicare Cost plans.
Stand-alone coverage plans provide only Part D prescription drug coverage. These Part D plans can be paired with Original Medicare alone or also with some private health plans, like Medicare Cost plans or Medicare Supplement (Medigap) plans.
You are eligible for a Part D plan if you:
- Are enrolled in Medicare Part A and/or Medicare Part B
- Are a permanent resident in the service area of the plan
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Stages and Cost Sharing 2021
| HOW DO STANDARD PART D PLANS WORK? | YOU PAY* |
|---|---|
| Annual Deductible: The amount you must pay each year for your prescriptions before your Medicare Part D plan begins to pay its share of your covered drugs. | You pay $445 |
| Initial Coverage: Once you meet your annual deductible, your plan pays for most of your drug costs, and you pay a set amount (copay) or a percentage of the costs (coinsurance) depending on the plan you selected. | You pay copay or coinsurance |
| Coverage Gap: Most Part D plans have a coverage gap (also called the "donut hole"). This means there’s a temporary limit on what the drug plan will cover for drugs. The gap begins once you and your plan have paid $4,130 for covered drugs for the year. | You pay 25% for generic drugs and no more than 25% for covered brand-name drugs |
| Catastrophic Coverage: Once you've spent $6,550 out of pocket in 2021, you're out of the coverage gap, and receive "catastrophic coverage." This means you’ll only pay a small copay or coinsurance for covered drugs the rest of the year | You pay $3.70 or 5%** for generic drugs and $9.20 or 5%** for other drugs |
* Part D plan benefits vary by carrier and product offerings
** Whichever is greater.
Choosing the Right Plan
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