How Does Medicare Part D Work?
Like any other insurance plan, you will pay a monthly premium for your Medicare Part D prescription drug plan. Premium rates vary from state to state. Most average about $31.92 a month. You may also have to pay a yearly deductible. This is the amount you pay for prescriptions before the drug plans starts to pay for them. Standard deductible is $310.00, however it can vary depending on the plan that you choose.
Will my Medicare Prescription Drug Plan Pay for All of My Medication?
Medicare Part D plans are not required to pay for all medications. Each plan is different and determines their own list of covered medications that they will pay for called formularies.
How is Each Plan’s List of Covered Medications Determined?
Most Medicare Part D formularies are broken down into tiers and each tier has a set co-pay amount. There are usually three to five tiers. The lowest tier, Tier 1, usually includes the preferred generic drugs and has a co-pay of $5.00 to $10.00.
Tier 2 typically includes the preferred brand drugs and has a co-pay of $20.00 to $30.00.
Tier 3 is usually reserved for the non preferred brand drugs which have a higher co-pay, usually between $40.00 to $100.00.
Tiers 4 and 5 contain specialty drugs and have the highest co-pay because these drugs are usually quite expensive.
Are There Limits to What My Prescription Drug Plans Pays?
With all Medicare Part D plans, you do have a limit as to how much Medicare will pay for prescription drug costs. If you do not have Extra Help, the limit is $4,550.00. After that you will reach what is called “catastrophic coverage” and you will pay five percent of the cost of each prescription.
If you do have Extra Help, the limit is $6,440.00. Once you’ve reached that limit you will get “catastrophic coverage” and will not pay anything for prescriptions for the rest of the year.