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What Does a Medicare Part D Prescription Drug Plan Offer?

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The Medicare Prescription Drug, Improvement, and Modernization Act (also referred to as the Medicare Modernization Act or MMA) is a federal law passed in 2003 that set the stage for a major overhaul of the entire Medicare system. One of the law’s key provisions required the Centers for Medicare & Medicaid Services (CMS) to set up distinct geographic regions for the administration of separate Medicare Part D Prescription Drug Plans. This was part of an effort to provide adequate access to prescription medications for all beneficiaries at the lowest possible cost. These stand-alone plans are often referred to as Medicare Part D Prescription Drug Plans.

Costs and coverage for Medicare Part D Prescription Drug Plans

Costs and coverage vary among Medicare Part D Prescription Drug Plans, depending on the area you live in and the Medicare-approved private insurance company offering the plan. Availability of Medicare Prescription Drug Plans also depends on where you live. This means that if you reside in Lackawanna County, Pennsylvania, you may not have access to the same Medicare Part D Prescription Drug Plans if you move to Monroe County, Florida. Monthly premiums might differ as well.

Each Medicare Prescription Drug Plan develops its own formulary. This is a list of prescription drugs the plan covers, organized into price-based levels or “tiers.” When researching plans, you might want to look at plan formularies to make sure they cover your medications. A plan formulary may change at any time. You will receive notice from your plan when necessary.

The “Donut Hole” (coverage gap)

Medicare Part D includes a potential coverage gap when you might pay a higher portion of your prescription medication costs. You will not necessarily get to this point.

If you and your Medicare Prescription Drug Plan spend a certain combined amount on prescription drug costs during a calendar year, you may reach the coverage gap. In most cases you pay up to 25% of the costs of generic drugs and up to 25% of covered brand-name drug costs (in 2020). After you reach a certain out-of-pocket spending total, you’ll pay a copayment or coinsurance for your prescriptions for the rest of the plan year.

Another way to get Medicare Part D prescription drug coverage

Instead of staying with Original Medicare (Part A and Part B) and enrolling in a stand-alone Medicare Part D Prescription Drug Plan, you may be able to sign up for a Medicare Advantage Prescription Drug plan. Available from private, Medicare-approved health insurance companies, Medicare Advantage plans deliver all your Medicare Part A and Part B benefits besides hospice care, which Medicare Part A covers directly (instead of through the Medicare Advantage plan). Medicare Advantage plans often give you additional benefits, such as routine vision or hearing services. With a Medicare Advantage Prescription Drug plan, you can get all your Medicare benefits in a single plan; however, you’ll still be in the Medicare program, and still need to pay your monthly Part B premium.

Adding or switching Medicare Part D Prescription Drug Plans

Your first opportunity to enroll in a Medicare Prescription Drug Plan is during your Initial Enrollment Period, when you are first eligible for Medicare. This coverage is optional, but if you don’t enroll when first eligible, you might have to pay a late-enrollment penalty if you sign up later on.

The Annual Election Period (AEP, also called Open Enrollment) offers another chance to sign up for, or switch, Medicare Prescription Drug Plans. You can make several Medicare coverage changes during the AEP, which runs from October 15 to December 7 every year. During the Medicare Advantage Open Enrollment Period from January 1 to March 31, you can disenroll from a Medicare Advantage plan and return to Original Medicare. If you do this, you’ll be able to enroll in a Medicare Part D Prescription Drug Plan.

In certain situations (for example, if you lose health coverage that you had), you might qualify for a Special Election Period (SEP) when you can enroll in a Medicare Prescription Drug Plan. For instance, you might qualify for an SEP if you move outside your plan’s service area, or if you move into or out of an institution such as a long-term care facility.

Would you like to compare Medicare Part D Prescription Drug Plans and find one that may fit your health needs? To quickly see which plans serve your geographic area and cover your prescription drugs, just enter your zip code where indicated on this page. eHealth’s plan comparison tool lets you enter your prescription drugs so you can limit your search to plans that cover those medications.

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