What Is Medicare Part D Insurance?

Medicare Part D is an optional prescription drug plan for anyone currently enrolled in Medicare. Before its introduction in 2006, many Americans spent thousands of dollars each year covering the costs of their prescriptions. 

If you need help finding a prescription plan, our locally based NC health insurance brokers 3 benefits to using a health insurance agent can help. We specialize in assisting people in North Carolina find the best prescription drug plan for their needs.

What does Part D Medicare cover?

Medicare Part D is insurance that helps pay for prescription drug costs. Plans are available through private insurance companies, and you must pay a monthly premium. 

Most health insurance companies have a network of pharmacies that you can use to purchase your prescriptions. This means that instead of paying the total price of the medication, you'll only pay a percentage or a copay of the drug's cost. Your insurance covers the rest of the cost.

How Medicare Part D works?

If you're enrolled in Original Medicare, you can choose to enroll in a standalone Part D drug plan that works alongside your existing benefits. Alternatively, you can select a Part D drug plan as part of a Part C Medicare Advantage plan.

All Medicare Part D plans follow federal guidelines, and each insurance provider must share the details of their plan outline to the Centers for Medicare and Medicaid Services each year for approval.

What are the stages of Medicare Part D?

A Part D Medicare plan has four unique stages, with a new structure expected in 2024. The current stages include:

1. Your annual deductible

The allowable Medicare Part D deductible for 2023 is $505, an increase from $480 in 2022. Different providers may charge you the entire deductible, a partial deductible, or waive your deductible entirely, depending on your circumstances. Once you satisfy the deductible, you enter the initial coverage stage.

1. Your initial coverage

During this stage, you'll pay a copay for your prescriptions based on the drug formulary. Each Part D drug plan separates its medications into different tiers, and each level has a copay amount you need to pay. Your insurance provider will monitor your spending, and when the combined amount totals $4660 for 2023, up from $4,430 in 2022, you've reached your annual initial coverage limit.

1. Your coverage gap

After you reach your initial coverage limit, you enter the coverage gap. This stage means you only pay 25% of the retail cost of your prescription drugs. This gap coverage continues until your total out-of-pocket costs reach $7400 for 2023 or $7,050 in 2022.

1. Catastrophic Coverage

If you reach your coverage gap limit, your plan goes into the catastrophic coverage stage. Your insurer pays 95% of the costs of your formulary medications for your yearly period. This stage helps reduce your spending if you need expensive drugs for your health care.

How Medicare tracks your spending

If you have Medicare Part D insurance, it's essential to understand that Medicare tracks your out-of-pocket costs annually to help protect you from paying for services twice. So, for example, if you've already satisfied the deductible on one plan and then switch to a new plan mid-year because you moved, Medicare can identify that you've already paid the deductible so that you won't incur any additional costs. 

Part D drug plans can also change from year to year. Your plan's benefits, formulary, pharmacy network, provider network, premium, and/or co-payments/co-insurance may change each year on January 1st. Medicare provides an Annual Election Period which means you can change your plan if you wish to do so.  This is from October 15 through December 7th every year.

What utilization rules mean

Medicare allows insurers to apply specific rules to help contain costs and safety. Some utilization rules you may encounter include:

• Quantity Limits: restricts how much medication can be purchased at once (or with each refill). If your physician prescribes over the quantity limit, they're typically required to fill an exception form. 

• Prior Authorization: you or your physician need plan approval before a pharmacy dispenses your medication. For example, your insurer may seek proof your prescription is medically required before they allow it. Likewise, the insurance company may ask for evidence that the medicine is medically necessary before they allow it. Your doctor must explain why your specific medication is needed and why other options won't be effective. 

• Step Therapy: your insurer may require you to try alternative medications that are less costly before they consider covering the prescribed medicine. 

These restrictions can affect any Part D plan and are particularly common when requesting pain medication, opiates or narcotics. If you require large amounts of pain medication, you'll likely face extra paperwork regardless of your chosen plan type. 

Some medications aren't covered under Part D, and if you need a specific drug that isn't on the plan's formulary, you'll need to file an exception to get your drug approved. Unfortunately, not all drugs get approved, so you may have to pay out of pocket for medications not covered by your plan.

To understand how rules and restrictions affect your plan, we recommend speaking to an experienced health insurance agent who can talk to you about how regulations impact your prescription costs. It's also a good idea to check your plan's formulary to determine if any conditions apply to the medication you're likely to need.

How much does Medicare Part D cost?

When you enroll in a Medicare Part D plan, you'll be required to pay a monthly premium to your insurer. This applies to everyone unless you qualify for Medicare's low-income subsidy. 

The cost of a Medicare Part D can vary depending on where you live and what's included in your coverage. However, you can expect to pay a minimum of $15 per month.

Eligibility for Medicare Part D

If you're currently enrolled in either Medicare Part A or Medicare Part B, then you are eligible to enroll in Medicare Part D. When searching for the right plan for your prescription needs, be sure you check that the plan is available in your area. If you need help, talk to a North Carolina based health insurance agent at Health Plans of NC.

Is Medicare Part D necessary?

Taking out a Medicare Part D plan depends on your circumstances and how often you currently use prescription drugs or expect to in the future. Many medications on the market cost hundreds or even thousands of dollars each year, which would be difficult to afford if you don't have the right coverage in place. More importantly, if you don’t enroll in a Medicare Part D plan when you become eligible to do so, you will pay a late enrollment penalty in the future when you do decide to enroll in a Part D  plan.

If you have any questions about Medicare parts A B C D, or any other health insurance plan, talking to a health insurance broker NC can help. We'll work with you to understand your prescription needs and find your best plan. So get in touch with us today.