Medicare Part D was created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. It makes prescription drug coverage available to all individuals with Medicare coverage.
To be eligible for Medicare Part D, you must be enrolled in Medicare Part A and/or Part B and live in the service area of a Medicare plan that includes prescription drug coverage. As a Medicare beneficiary, you can get prescription drug coverage through one of two options below (and you must continue paying your Medicare Part B premium no matter which you choose).
Medicare Part D Prescription Drug Plans
Medicare Part D Prescription Drug Plans, also known as PDPs, are stand-alone Prescription Drug Plans that are available through Medicare-contracted private insurance companies. Medicare beneficiaries can sign up for a Medicare Prescription Drug Plan if they would like to add Part D prescription drug coverage to their Original Medicare coverage.
Certain Medicare Advantage plans that don’t cover prescription drugs, such as certain Cost Plans, some Private Fee-for-Service (PFFS) plans, and Medical Saving Account (MSA) plans might allow you to add a stand-alone Prescription Drug Plan for your Part D coverage, although these situations may vary. In general, however, you can get prescription drug benefits through your Medicare Advantage plan if it’s available. In fact, if you’re already enrolled in a Medicare Advantage plan that includes prescription drug benefits and you then enroll in a Medicare Prescription Drug Plan, you’ll be automatically disenrolled from Medicare Advantage and returned to Original Medicare.
Medicare Advantage Prescription Drug Plans
Medicare Advantage Prescription Drug Plans are Medicare Advantage health plans that also offer prescription drug coverage. These plans combine the coverage of Original Medicare, Part A and Part B (excluding hospice care, which continues to be covered by Medicare Part A of the federal program), with the Part D prescription benefit, meaning that all of your Medicare coverage is housed under one plan. There are several different types of Medicare Advantage plans, including Health Maintenance Organization (HMO) plans, Preferred Provider Organization (PPO) plans*, and Special Needs Plans (SNPs); any of these plan types may be a Medicare Advantage Prescription Drug plan. Keep in mind that not every Medicare Advantage plan includes prescription drug benefits, so always check with the specific plan you’re interested in before enrolling, if you want this type of coverage included.
To enroll in this type of plan, you need to be enrolled in both Medicare Part A and Part B, live in the service area of a Medicare Advantage plan, and not have end-stage renal disease (with some exceptions).
In either scenario, a Medicare beneficiary would be required to pay the monthly premium charged by the plan (if applicable), and these premiums vary by insurance provider. Some Medicare Advantage plans may have premiums as low as $0; however, even in this case, you would need to continue to pay your Part B premium.
Are my prescriptions covered?
Each Medicare Prescription Drug Plan and Medicare Advantage Prescription Drug plan has its own list of covered prescription drugs called a “formulary.” Medicare plans that cover prescription drugs place covered medications into different tiers, and the prescription drugs on higher tiers may have higher copayment and coinsurance costs than medications on lower tiers. The formulary may change at any time of the year; you’ll be notified by your Medicare plan if needed.
Medicare requires all plans that cover prescription drugs to cover “all or substantially all” of the prescription drugs in six protected classes:
- Antineoplastic (anticancer) drugs
- Antiretroviral (HIV) drugs
Medicare Part D doesn’t cover certain types of medications, including:
- Over-the-counter drugs
- Fertility drugs
- Medications to treat hair growth
Since each Medicare Prescription Drug Plan and Medicare Advantage Prescription Drug plan can cover different prescription drugs, it is essential to evaluate all available Medicare Part D coverage options in your area to determine:
- If your prescription drugs are covered (you can find this information by checking the plan’s formulary).
- The estimated out-of-pocket expenses you should expect to pay during the year for your medications (such as copayments or coinsurance) and plan premiums.
- If there are any plan rules limitations placed on your prescription drugs (e.g., monthly quantity limits, prior authorization).
- If the plan requires you to use certain network pharmacies to fill your prescriptions.
- What your costs may be if you enter the coverage gap (also known as the “donut hole“) and if the plan offers extra benefits in the coverage gap.
Which type of Medicare prescription drug coverage should I choose?
There is no easy answer to this question. The number of available Medicare Part D stand-alone Prescription Drug Plans and Medicare Advantage Prescription Drug plans can vary by area, and each plan might offer different coverage options and costs. There may not be a single plan that would fulfill the needs of every beneficiary looking to enroll, and it is recommended that you consider all of the options before making a decision.
Keep in mind that what may end up working for you may come down to your specific health status, budget, and preferences. A good place to start may be to consider whether you’d prefer to stay enrolled in Original Medicare and get stand-alone Part D coverage or if you like the convenience of having all of your health and prescription drug benefits through one plan (in which case a Medicare Advantage Prescription Drug plan might be a good option).
As Medicare beneficiaries ask “What type of Medicare Part D coverage is right for me?” they should consider all of the prescriptions they currently use and look for a plan that provides coverage for as many of them as possible (as mentioned, you can find this information by looking up the plan’s formulary). If multiple plans offer an amount of coverage that is satisfactory, compare the prices at which the prescriptions are offered. Plans may also feature different pharmacy availability, meaning your pharmacy of choice or the pharmacy closest to you may not be covered by a plan. These are all aspects to consider when choosing a Medicare plan that offers prescription drug coverage.
*Out-of-network/non-contracted providers are under no obligation to treat Preferred Provider Organization (PPO) plan members, except in emergency situations. For a decision about whether we will cover an out-of-network service, we encourage you or your provider to ask us for a pre-service organization determination before you receive the service. Please call our customer service number or see your Evidence of Coverage for more information, including the cost-sharing that applies to out-of-network services.