Written By: Donald Kreis | Licensed since 2002 Print
Medicare beneficiaries can get Medicare Part D prescription drug coverage through either a stand-alone Part D plan or a Medicare Advantage Prescription Drug plan. In either scenario, Medicare Part D coverage of prescription drugs follows four benefit phases:
- Deductible: Some prescription drug plans have a deductible phase. That means you will pay the full cost of your drugs until you have met your Medicare Part D or Medicare Advantage prescription drug plan’s deductible for that calendar year.
- Initial coverage limit: In this phase of your Medicare Part D coverage, you pay a copayment or coinsurance for each covered drug. The specific amount of the copayment or coinsurance is usually based on the tier (or level) of your drugs. The lower tiers are usually less expensive (and may include cheaper generic drugs). Once the total yearly drug costs, including what you pay and what your prescription drug plan or Medicare Advantage Prescription Drug plan pays, reach a specified amount ($2,960 in 2015), you will move into the coverage gap phase, also called the “donut hole.”
- Coverage gap, or “donut hole”: During this phase, you have limited coverage for your drugs. In 2015, you will generally pay 45% of the costs for name-brand drugs and 65% of the costs for generics until your yearly out-of-pocket drug costs reach $4,700. The percentages and
amounts needed to reach the coverage gap may vary from year to year. Once you have reached the yearly out-of pocket drug costs for the year, you will move into the next phase, called catastrophic coverage.
- Catastrophic coverage: After you’ve paid $4,700 in out-of-pocket drug expenses for 2015, you only have to pay a small copayment or coinsurance for covered drugs until the end of the year. Some beneficiaries won’t spend more than $4,700 in out-of-pocket drug expenses, so they may never reach the catastrophic coverage phase this year.
For more details about your costs in the Medicare coverage gap or donut hole, please see Medicare.gov .
Important: This cost and coverage information only applies to medications included in the formulary (or drug list) for the Medicare Part D prescription drug plan or Medicare Advantage Prescription Drug plan you have. If your medication is not listed in your plan’s formulary, it will generally not be covered at all unless you can get a formulary exception. It’s a good idea to research all available Medicare prescription drug plans before enrolling or switching plans to make sure you can get coverage for all your medications.
Again, not every beneficiary will reach the coverage gap, and those who do can possibly find a prescription drug plan that offers more coverage during the gap.
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