What is Medicare Part D Prescription Drug Coverage?

What is Medicare Part D Prescription Drug Coverage?

Find out how Part D works, what it costs, and more.

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What is Medicare Part D?

Medicare Part D Prescription Drug plans are part of the government’s Medicare program, but they are offered and managed through approved private insurers, like Cigna. These plans help lower the cost of prescription drugs that can prevent complications from disease and help keep you healthy.

If you are entitled to Original Medicare Part A and/or enrolled in Medicare Part B, there are 2 ways you can get Part D Prescription Drug coverage.

  • Enroll in a separate, or standalone, Medicare Part D Prescription Drug plan (when you turn 65 or during Open Enrollment)
  • Choose to join a Medicare Advantage plan (Part C) that includes drug coverage. (Not all Medicare Advantage plans include drug coverage. Review the details of any plan before you enroll.)

Part D
Prescription Drug Coverage

Part D plans are part of the government’s Medicare program, but they’re offered and managed through approved private insurers, like Cigna. Enrollment in a separate Part D plan is not automatic. You need to select and enroll in a plan.

What are the pros and cons of Part D Prescription Drug plans?

Advantages of Part D Prescription Drug plans include:

  • Cost protection: Part D plans help protect against high-cost prescription drugs by offering various levels of cost coverage for different “tiers” of drugs
  • Low premiums help make these plans affordable
  • Flexible plan options: Part D plans offer you choices in cost and benefit levels depending on your needs and other coverage you may have.
  • Works with Medicare Part A and Part B (Original Medicare), or may be included in a Medicare Advantage plan (Part C)

Disadvantages of Part D Prescription Drug plans include:

  • Need to anticipate your prescription drug needs for the year: Part D plans differ in the types of drugs they cover. Knowing your medical situation can help you select a plan that is right for you and covers the prescription drugs you expect to need.
  • Plans differ from insurer to insurer: Part D plans must offer a minimum amount of coverage per Medicare, but otherwise plans can differ. This means you need to shop around and educate yourself on what each plan covers.
  • Not all drugs are covered: Each plan has its own drug list (formulary), level of cost coverage, and monthly premium.
  • Late Enrollment Penalty (LEP): Fail to enroll in a Part D plan when you are eligible and you may end up paying a late enrollment penalty. For every month you delay enrolling, Medicare will charge you a small fee, which is added to your monthly premium.

Learn more about Medicare Part D Enrollment and the LEP

How do Medicare Part D plans work?

A typical Part D plan has 3 phases and works like this:

  • Deductible and Initial Coverage: The “typical” plan has an annual deductible. After you have paid costs equal to the deductible amount, then you have Initial Coverage. In this phase, you will only pay a copay or coinsurance on covered prescription drugs until you reach the Initial Coverage Limit, which starts the Coverage Gap.
  • Coverage Gap: Also known as the “donut hole.” Here you pay a discounted amount for brand and generic drugs. Once your combined drug costs reach the upper level of the Coverage Gap, you move to Catastrophic Coverage.
  • Catastrophic Coverage: You will pay a small amount for medications, typically not more than 5% of the cost. The plan pays most of the cost.

Are all Part D plans the same?

Medicare requires Part D plans to provide a minimum standard level of coverage, but beyond that plans can differ in level of coverage, drug lists, and monthly premiums.

What drugs are covered by Medicare Part D?

Part D plans help pay for medications you take regularly to manage chronic conditions, for example, heart disease, high cholesterol, or asthma. It also pays for medications you take for a short period of time, such as antibiotics. There are also some medications covered by your Original Medicare Part B (Medical) plan and not covered by Part D.

Read more about Part B vs. Part D

What costs are involved in a Part D Prescription Drug plan?

Costs you pay out-of-pocket for a Part D prescription drug plan include the following:

  • Part D monthly premium: This is a flat fee you may have to pay to your plan for providing you with coverage.1
  • Part B premium: You must continue to pay Part B premiums as part of your Original Medicare coverage.
  • Copays and coinsurance: You and Medicare share a percentage of the costs for your prescription drugs. This means you pay part of your pharmacy drug costs (copays and coinsurance) and Medicare (through your plan) also pays part of your pharmacy drug costs.

If you choose a Medicare Advantage Plan that includes drug coverage, your monthly plan premium will include the medical and drug portion of the plan.

Note: In some cases, your premium may be higher if you didn’t sign up for Part D when you first became eligible.

There are no cost breaks for married couples. Medicare requires each spouse to pay separate premiums, deductibles, copays, and coinsurance for prescription drug coverage. Each spouse will reach each level of coverage according to their own drug costs over each calendar year.

How to Pay Your Part D Premium

There are 4 ways to pay your Medicare Part D Prescription Drug Plan premiums:

  • You can have your premium automatically deducted from your savings or checking account, or charged to a credit or debit card.
  • You can have the premium deducted from your Social Security benefit/check (if your monthly payment covers your premium).
  • The insurer you choose for your plan(s) can send you a bill each month.
  • Your employer (or prior employer) might pay your Medicare benefits, so you pay little to no premium.

Cigna also offers the ability to pay your premiums online or over the phone.

Find out how you can pay your Cigna Part D premium

Is there financial help for Part D?

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 you choose a Medicare Part D plan?

The following factors may affect how you choose a Part D plan:

  • Consider the medications you take—how many medications do you take, are they available as generics, do you have a chronic condition that requires specialty medications like insulin, nebulizers, etc.?
  • If you want prescription drug coverage as part of a Medicare Advantage Plan, make sure you review the details of that drug coverage—is it enough to cover your prescription needs?
  • Standalone plans can differ among private insurers and offer various levels of drug coverage and different pharmacy networks.
  • Review Part D plan options, considering monthly premium and other costs.

Where are you in your Medicare journey?

Select the one that best describes you:

1 Most people will pay the standard monthly Medicare Prescription Drug Plan (Part D) premium. However, you may have to pay an extra amount because of your annual income. For 2020, 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.