Medicare’s drug program (Part D) is the most confusing aspect of Medicare, bar none. Complicated drug plans coupled with price negotiation limitations have seniors frustrated at the pharmacy. I’m hoping to shed some light on how these plans work and eliminate a bit of that frustration.
Drug plans can be changed once a year (Oct. 15 – Dec. 7), unless you have a special election period.
Seniors typically receive drug coverage in one of two ways: “stand alone” drug coverage, or Medicare Advantage plans that include drug coverage. Both types of coverage are comparable, except that the stand-alone drug plan has a monthly premium and the drug coverage on the Advantage plan typically does not.
These drug plans operate in “phases,” so seniors must work through them in order.
1st Phase: Deductible – Most (though not all) drug plans have a deductible. This means that seniors typically pay the “retail price” of that drug until the deductible is satisfied. For 2024, the deductible on most plans is $545. It’s worth noting that certain plans only apply the deductible to tier 2 drugs and above.
2nd Phase: Cost after Deductible – In this phase, seniors receive the “discounted price” on medications. Patient responsibility varies depending on the tier level of each drug. Remember, generics are always substantially less than brand.
3rd Phase: Coverage Gap or “Donut Hole” – Seniors move to this phase once they’ve crossed a “cost” threshold. For 2024, the threshold is $5,030 in prescriptions. In this phase, patient responsibility is 25% of generics and brand. Seniors stay in this phase until they reach $8,000 (research TrOOP for more detail).
4th Phase: Catastrophic – Phase 4 comes with a big reprieve in cost. After your out-of-pocket cost totals $8,000 you exit the gap and get catastrophic coverage – no cost in this phase. This is new for 2024.
Picture yourself on a timeline throughout the year. At any given point you are in one of these phases, and your prescription costs generally change as you move through them. I’ve left out a lot of detail in the interest of space, but this should help give you a general understanding of Part D. As always, I’m here to help and would love to talk through what all of this actually means for you. My service is absolutely free and you’re welcome to swing by the office anytime! You can reach me at 972-393-5080 or visit us at 2604 Long Prairie Road, Suite 100, Flower Mound, 75022.
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