What is Part D Coverage ?

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If you decide not to get Medicare drug coverage when you're first eligible, you'll likely pay a late enrollment penalty if you join later, unless one of these applies:

You have other creditable prescription drug coverage
You get Extra Help

Generally, you'll pay this penalty for as long as you have Medicare prescription drug coverage.

To get Medicare drug coverage, you must join a Medicare plan that offers prescription drug coverage. Each plan can vary in cost and drugs covered.

How to Get Prescription Drug Coverage

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Medicare Prescription Drug Plan

(Part D)

These plans (sometimes called "PDPs") add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.

Medicare Advantage Plan (Part C)

Like an (HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A ( Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.”

You must have Part A and Part B to join a Medicare Advantage Plan.

How to Join a Drug Plan

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How to Join Part C

How to Join in Medicare Advantage Plan

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What Medicare Part D Drug Plans Cover

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Each plan that offers prescription drug coverage through Medicare Part D must give at least a standard level of coverage set by Medicare.

Plans can vary the list of prescription drugs they cover (called a formulary) and how they place drugs into different "tiers" on their formularies.

Formularies

Most Medicare drug plans (Medicare Prescription Drug Plans and Medicare Advantage Plans with prescription drug coverage) have their own list of what drugs are covered, called a formulary. Plans include both brand-name prescription drugs and generic drug coverage. The formulary includes at least 2 drugs in the most commonly prescribed categories and classes. This helps make sure that people with different medical conditions can get the prescription drugs they need. All Medicare drug plans generally must cover at least 2 drugs per drug category, but plans can choose which drugs covered by Part D they will offer.

The formulary might not include your specific drug. However, in most cases, a similar drug should be available. If you or your prescriber (your doctor or other health care provider who’s legally allowed to write prescriptions) believes none of the drugs on your plan’s formulary will work for your condition, you can ask for an exception.

A Medicare drug plan can make some changes to its drug list during the year if it follows guidelines set by Medicare. Your plan may change its drug list during the year because drug therapies change, new drugs are released, or new medical information becomes available.

Plans offering Medicare prescription drug coverage under Part D may immediately remove drugs from their formularies after the Food and Drug Administration (FDA) considers them unsafe or if their manufacturer removes them from the market. Plans meeting certain requirements also can immediately remove brand name drugs from their formularies and replace them with new generic drugs, or they can change the cost or coverage rules for brand name drugs when adding new generic drugs. If you’re currently taking any of these drugs, you’ll get information about the specific changes made afterwards.

You may need to change the drug you use or pay more for it. You can also ask for an exception. Generally, using drugs on your plan’s formulary will save you money. If you use a drug that isn’t on your plan’s drug list, you’ll have to pay full price instead of a copayment or coinsurance, unless you qualify for a formulary exception. All Medicare drug plans have negotiated to get lower prices for the drugs on their drug lists, so using those drugs will generally save you money. Also, using generic drugs instead of brand-name drugs may save you money.

For other changes involving a drug you’re currently taking that will affect you during the year, your plan must do one of these:

Give you written notice at least 30 days before the date the change becomes effective.
At the time you request a refill, provide written notice of the change and at least a month’s supply under the same plan rules as before the change.

Generic Drugs

Generic drugs use the same active ingredients as brand-name prescription drugs. Generic drug makers must prove to the FDA that their product works the same way as the brand-name prescription drug. In some cases, there may not be a generic drug the same as the brand-name drug you take, but there may be another generic drug that will work as well for you. Talk to your doctor or other prescriber about your generic drug coverage.

The Food and Drug Administration (FDA) says generic drugs are copies of brand-name drugs and are the same as those brand-name drugs in:

dosage form
safety
strength
route of administration
quality
performance characteristics
intended use

Tiers

To lower costs, many plans offering prescription drug coverage place drugs into different “tiers” on their formularies. Each plan can divide its tiers in different ways. Each tier costs a different amount. Generally, a drug in a lower tier will cost you less than a drug in a higher tier.

In some cases, if your drug is in a higher (more expensive) tier and your prescriber thinks you need that drug instead of a similar drug on a lower tier, you can file an exception and ask your plan for a lower copayment.

Remember, this is only an example—your drug plan's tiers may be different.

Here's an example of a Medicare drug plan's tiers (your plan’s tiers may be different):

Tier 1—lowest copayment : most generic prescription drugs
Tier 2—medium copayment: preferred, brand-name prescription drugs
Tier 3—higher copayment: non-preferred, brand-name prescription drugs
Specialty tier—highest copayment: very high cost prescription drugs

Costs for Medicare Drug Coverage

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You'll make these payments throughout the year in a Medicare drug plan:

Premium
Yearly deductible
Copayments or coinsurance
Costs in the coverage gap
Costs if you get Extra Help
Costs if you pay a late enrollment penalty

Your actual drug plan costs will vary depending on:

The drugs you use
The plan you choose
Whether you go to a pharmacy in your plan's network
Whether the drugs you use are on your plan's formulary
Whether you get Extra Help paying your Medicare Part D costs

How Part D Works with Other Insurance

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Employer or union health coverage

Employer or union health coverage refers to health coverage from your, your spouse's, or other family member's current or former employer or union. If you have prescription drug coverage based on your current or previous employment, your employer or union will notify you annually about whether your prescription drug coverage is creditable

COBRA

There may be reasons why you should take Medicare Part B instead of, or in addition to, COBRA. If you take COBRA and it includes creditable prescription drug coverage, you'll have a special enrollment period to join a Medicare Prescription Drug Plan without a penalty when COBRA ends.

Medicare Supplement Insurance (Medigap) policy with Prescription Drug Coverage

It may be to your advantage to join a Medicare Prescription Drug Plan because most Medigap drug coverage isn't creditable. You may pay more if you join a drug plan later.
Medigap policies can no longer be sold with prescription drug coverage, but if you have drug coverage under a current Medigap policy, you can keep it. If you join a Medicare drug plan, your Medigap insurance company must remove the prescription drug coverage under your Medigap policy and adjust your premiums. Call your Medigap insurance company for more information.

Medicaid

Your drug costs are covered by Medicare. You'll need to join a Medicare Prescription Drug Plan for Medicare to pay for your drugs.
In most cases, you'll pay a small amount for your covered drugs. If you have full coverage from Medicaid and live in a nursing home, you pay nothing for covered prescription drugs.
If you have full coverage from Medicaid and live in an assisted living or adult living facility, or a residential home, you'll pay a small copayment for each drug.
If you don't join a drug plan, Medicare will enroll you in one to make sure you don't miss a day of coverage. If you decide you want another plan, you can switch to another plan at any time.

Supplemental Security Income Benefits

If you get benefits or help from your state Medicaid program paying your Medicare premiums, you need to join a Medicare Prescription Drug Plan for Medicare to cover your drugs. You automatically qualify for Extra Help with your prescription drug costs. If you don't join a plan, Medicare will enroll you in one to make sure you don't miss a day of coverage.

State Pharmaceutical Assistance Program

Each state decides how its State Pharmaceutical Assistance Program (SPAP) works with Medicare prescription drug coverage. Some states give extra coverage when you join a Medicare Prescription Drug Plan. Some states have a separate state program that helps with prescriptions.

Long-Term Care Facility

Long-term care pharmacies contract with Medicare Prescription Drug Plans to provide drug coverage to their residents. If you're entering, living in, or leaving a nursing home, you'll have the opportunity to choose or switch your Medicare drug plan. This allows you to choose a plan that contracts with your nursing home's pharmacy.

HUD housing assistance

If you get housing assistance from the Department of Housing and Urban Development (HUD), you may want to join a Medicare Prescription Drug Plan.
If you qualify for Extra Help, you won't lose your housing assistance. However, your housing assistance may be reduced as your prescription drug spending decreases. The value of the Extra Help paying your drug costs will make up for any decrease in your housing assistance.

Food Stamps

If you get food stamps, you may want to join a Medicare Prescription Drug Plan. If you qualify for Extra Help, your food stamp benefits may decline, but that decline will be offset by Extra Help.
If you're near the food stamps eligibility cutoff, you may lose your minimum food stamp benefits because you’ll be paying less for your prescription drugs. The value of the Extra Help paying your drug costs will make up for any decrease in food stamp benefits.

Health Insurance Marketplace

A service that helps people shop for and enroll in affordable health insurance. The federal government operates the Marketplace, available at HealthCare.gov, for most states. Some states run their own Marketplaces.
The Health Insurance Marketplace (also known as the “Marketplace” or “exchange”) provides health plan shopping and enrollment services through websites, call centers, and in-person help.

The types of insurance listed below are all considered creditable prescription drug coverage. If you have one of these types of insurance, in most cases, it will be to your advantage to keep your current coverage.

Federal Employee Health Benefits (FEHB) Program
Veterans' Benefits
TRICARE (military health benefits)
Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA)
Indian Health Services

Part D Videos

Still need more information about Prescription Drug Plans? Here is a compilation of videos for you to view to understand Prescription Drug Plans (Part D) along with other Medicare info videos

Other Resources