Medicare Part D Costs Frequently Asked Questions
- What are the out-of-pocket costs for standalone Medicare prescription drug coverage?
You pay a monthly premium to your plan. You also pay part of your pharmacy drug costs and Medicare (your plan) pays part of the pharmacy drug costs.
Your costs will vary depending on which plan you choose. However, your plan must, at a minimum, provide a standard level of Medicare prescription coverage.
- How does the 2016 Standard Medicare Part D work?
The Standard Medicare Part D program works like this:
If you pay a monthly premium.
- Deductible Stage - You pay a $360 deductible, which means that you will pay 100% of your discounted prescription costs until you meet this deductible amount. Some plans do not have a deductible.
- Initial Coverage Stage - After you meet your deductible, you have initial coverage, in which you pay a reduced cost-sharing for prescription drugs up to a predetermined limit. For 2016, this limit is $3,310 and is based upon total drug costs (that both you, and others on your behalf, and your Part D plan pay)
- Coverage Gap Stage - After your yearly total drug costs reach $3,310, you move into the coverage gap stage. For 2016, you will pay 45% of the manufacturer’s discounted brand-name drug price and 58% of generic drug costs. You’ll also pay 45% of any dispensing fees and vaccine administration fees.
If you are receiving Low Income Subsidy "Extra Help," these discounts are not applicable — you already have coverage through the gap.
- Catastrophic Coverage Stage- You will remain in the coverage gap until your total out-of-pocket costs reach $4,850, at which time you move into the catastrophic stage for the remainder of the calendar year.
You'll pay the higher of:
- 5% of the discounted prescription drug costs or
- $2.95 copay for generic (including brand drugs treated as generic) or $7.40 copay for all other drugs
- These values are set by Medicare on an annual basis.
- Are there any cost breaks for married couples?
No. Medicare requires each spouse to pay separate premiums, deductibles and copays and coinsurance for prescription drug coverage. Each spouse will reach each level of coverage according to his or her own drug costs over each calendar year.
- Is there an extra Medicare Part D premium amount because of my income level?
Most people will pay the standard monthly Part D premium. However, you may have to pay an extra amount because of your annual income. For 2016, single or married individuals filing separately whose income is $85,000 or above, and couples with an income of $170,000 will pay the extra amount.
If you are impacted, the Social Security Administration (not your Medicare Part D plan) will send you a letter telling you what the amount will be and how to pay it. This extra amount must be paid separately and cannot be paid with your monthly Part D premium.
- How can I pay the plan premium?
- What is financial help?
Medicare provides assistance, known as Extra Help, in paying for prescription drug costs for those with limited income and resources.
If you qualify, you will receive help paying for any Medicare drug plan's monthly premium, annual deductible (if applicable) and prescription copays or coinsurance. This Extra Help will count towards your out-of-pocket expenses.
- How do I know if I qualify for financial help?
People who receive full Medicaid benefits are automatically eligible for Extra Help with their drug costs and do not need to apply separately for the Extra Help. Medicare will mail a letter to people who automatically qualify for this assistance.
People who receive any help from Medicaid paying their Medicare premiums or receive Supplemental Security Income automatically receive Extra Help and do not need to apply separately. However, these individuals will need to enroll in a Medicare prescription drug plan.
Those who do not receive assistance from Medicaid but have limited income and resources are encouraged to apply for Extra Help and enroll in a Medicare drug plan. To receive assistance with the Medicare drug benefit, the following steps must be completed:
- Apply for Extra Help based on your income and resources; and
- Sign up for a prescription drug plan to begin using the benefit.