October 4, 2017
Medicare Part D offers Medicare beneficiaries the opportunity to receive prescription drug coverage from private insurance companies contracted with Medicare. Two types of Medicare plans provide prescription drug coverage: stand-alone Medicare Part D Prescription Drug Plans and Medicare Advantage Prescription Drug plans, which combine health and prescription drug coverage in a single plan. Costs for these Medicare plans providing prescription drug coverage vary, but most have you pay a monthly premium, annual deductible, and copayments or coinsurance.
How much are Medicare Part D premiums?
The Medicare Part D monthly premium varies by plan. In addition, a Medicare plan providing prescription drug coverage may change its premium each year based on inflation and estimated cost increases. The Centers for Medicare & Medicaid Services (CMS) set the base premium for a Medicare Part D prescription drug plan in 2018 at $35.02 per month. Given this situation, the most affordable Medicare plan providing prescription drug coverage for you last year may not be the right plan for you this year.
If your modified adjusted gross income as reported on your IRS tax return from 2 years ago (the most recent tax return information provided to Social Security by the IRS) is above a certain limit, you may pay a Part D income-related monthly adjustment amount (Part D-IRMAA) in addition to your monthly plan premium. This extra amount is paid directly to Medicare, not to your plan.
If you’re enrolled in a Medicare Part D Prescription Drug Plan, you may qualify for a low-income subsidy, also called the Extra Help program. To be eligible for the Extra Help program, you need to reside in one of the 50 United States or the District of Columbia and have limited resources including such things as bank accounts, stocks, and bonds ($13,820 for an individual, $27,600 for a couple living together in 2017) and a limited annual income ($18,090 for an individual, $24,360 for a married couple living together in 2017). In such a case, you can receive help with your monthly premiums, annual deductibles, and prescription copayments. You can apply online at www.socialsecurity.gov/extrahelp or call Social Security at 1-800-772-1213 (TTY users 1-800-325-0778). Social Security representatives are available Monday through Friday, from 7AM to 7PM.
What other costs do Medicare Part D Prescription Drug plans have?
The Medicare Part D prescription drug deductible is a maximum of $405 in 2018. Some Medicare Part D Prescription Drug plans have deductibles well under this amount and some plans don’t have a deductible.
Because of changes adopted in the federal Affordable Care Act, Medicare’s Part D prescription drug coverage gap (i.e., the “donut hole”) is gradually closing. The coverage gap is a temporary limit on what the plan will cover for drugs. Not everyone will enter the coverage gap. It begins after you and your plan have spent a certain amount for covered drugs. In 2018, the coverage gap started when an individual and the Medicare Part D Prescription Drug plan they were enrolled in had spent a total of $3,700 on medications.
Prior to 2010, Medicare Part D beneficiaries were responsible for 100 percent of their prescription costs while in the coverage gap. But provisions in the Affordable Care Act have allowed the percentage of drug costs that people pay while in the coverage gap to steadily decrease. In 2018, Medicare beneficiaries’ cost in the coverage gap for prescription drugs is 35 percent for brand name drugs, and 44 percent for generics.
Once you and your drug plan have spent $5,000 in out-of-pocket drug costs for 2018, you leave the coverage gap and automatically receive catastrophic coverage. At that point you will pay only a small coinsurance amount or copayment for covered drugs for the remainder of the year.
How to compare Medicare plan providing prescription drug coverage
You will want to compare annual Medicare Part D drug coverage costs (including premiums, deductibles, and out-of-pocket expenses) among the various plans available in your area. By evaluating all of your medication-related spending, you can make a more informed choice regarding which Medicare plan providing prescription drug coverage may be right for you.
1Medicare projects relatively stable average prescription drug premiums in 2017. CMS.gov. Centers for Medicare & Medicaid Services. 7/29/2016. Accessed at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-07-29.html