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Summary: Medicare Part D Prescription Drug Plans help Medicare beneficiaries get coverage for their prescription medications. Medicare Part D in 2020 could bring some changes for beneficiaries with these plans. Costs will be adjusted for late enrollment penalties, deductibles, and the coverage gap.
Changes are coming to Medicare Part D costs in 2020. If you depend on a Medicare Prescription Drug Plan to cover the cost of your medications, you need to know about these changes so you can budget for next year. If you are going to be enrolling in a prescription drug plan, these changes will also affect you.
The Basics of Medicare Part D
Medicare Part D is prescription drug coverage that helps you pay for your medications. This coverage is not included with Original Medicare. You can enroll in a stand-alone prescription drug plan in addition to your Original Medicare. You can also enroll in a Medicare Advantage plan that includes prescription drug coverage. A Medicare Advantage plan is an alternative way of getting your Original Medicare benefits.
Private insurance companies approved by Medicare offer prescription drug plans. The plans may feature different benefits and costs can vary. It is important to compare plans to be sure you get the best coverage for your needs and budget.
Medicare Part D Costs: What You Pay
If you enroll in a Medicare drug plan, you will encounter certain costs during the year. Those expenses might include:
- Annual Deductible
- Monthly Premium
- Medication Costs (Copayment and Coinsurance)
- Late Enrollment Penalty
- Costs during the Coverage Gap
Some of these costs may change from 2019 to 2020. By understanding the changes now, you can plan better for the future.
Medicare Part D 2020: What You can Expect
Medicare Part D costs for 2020 have been determined by the Centers for Medicare and Medicaid Services (CMS). Those costs will include:
The annual deductible is the amount you pay out-of-pocket before your prescription drug coverage begins. The deductible is set by the company offering the prescription drug plan. However, Medicare sets limits on how high the deductible can be. In 2019, the deductible limit was $415. In 2020, the limit will increase to $435. Note that not all companies will charge this amount. It’s possible that some companies might not charge any deductible.
The monthly premium is an amount you pay each month to have your plan. This cost is also determined by your insurance provider. However, beneficiaries that make over a certain income will need to pay an additional amount to Medicare each month. This is known as an income-related monthly adjustment amount, or IRMAA. IRMAA amounts for 2020 are as follows:
|If you file an individual tax return and your income in 2018 is:||If you file a joint tax return and your income is:||Your Part D IRMAA amount for 2020 will be:|
|$87,000 or lower||$174,000 or lower||No IRMAA amount due|
|$87,000 – $109,000||$174,000 – $218,000||Your IRMAA amount is $12.20 in addition to your plan premium|
|$109,000 – $136,000||$218,000 – $272,000||Your IRMAA amount is $31.50 in addition to your plan premium|
|$136,000 – $163,000||$272,000 – $326,000||Your IRMAA amount is $50.70 in addition to your plan premium|
|$163,000 – $500,000||$326,000 – $750,000||Your IRMAA amount is $70.00 in addition to your plan premium|
|$500,000 or higher||$750,000 or higher||Your IRMAA amount is $76.40 in addition to your plan premium|
Late Enrollment Penalty
Some beneficiaries pay a late enrollment penalty on top of their monthly premium. You will pay the late enrollment penalty if you go without prescription drug coverage for 63 days or more after your Initial Enrollment Period (IEP). You will continue to pay the late enrollment penalty as long as you have a Medicare drug plan.
The penalty is determined by multiplying the number of months without prescription drug coverage by the “national base beneficiary premium.” The national base beneficiary premium can change from year to year. In 2020, that amount will be $32.74, which is down from the 2019 amount of $33.19.
For example, if you went 12 months without credible prescription drug coverage, you would pay .12 (12% penalty) X 32.74 – $3.92.
$3.92 rounded to the nearest $0.10 = $3.90.
$3.90 = your monthly late enrollment penalty for 2020.
Medicare Part D Costs: Understanding the Coverage Gap
Medicare Part D 2020 also includes changes to the coverage gap, also known as the donut hole. You move into the coverage gap once you have paid a certain amount in out-of-pocket expenses for your prescription drug coverage and medications. In 2019, the threshold was $3820. In 2020, the amount will increase to $4020.
Once you enter the coverage gap, you will pay a percentage of the cost of your medications. In 2019, beneficiaries in the coverage gap pay 25% for brand-name medications and 37% for generic medications. Medicare covers 5% of brand-name medications and the drug manufacturer discounts the cost by another 70%. Medicare covers 63% of the cost of generic medications.
In 2020, you will pay 25% for both brand-name and generic medications. Medicare will continue to cover 5% of brand-name drugs and the 70% discount will still apply. Medicare will increase coverage of generic drugs to 75%.
Which Prescription Drug Plan is Right for You?
When you know what to expect from Medicare Part D 2020, it is easier to make sure you have the right coverage for your needs in the upcoming year. The Fall Open Enrollment Period for Medicare goes on every year from October 15 until December 7. During this time, you can make changes to your prescription drug plan. To get started, simply click the Get Quotes button to schedule a phone call or to request a personalized email.