Medicare Part D Prescription Drug Plans
Two people on the same medication can end up in very different places depending on which plan they chose. This is the part of Medicare where the details on your own prescription list matter most.
What Part D is and why it exists
Original Medicare, Parts A and B, was not built to cover most prescription medications you pick up at a pharmacy. Part D is the framework Congress added to address that, and it is delivered through private insurance companies under contract with Medicare rather than by the federal government directly.
Which means Part D is not automatic and it is not one thing. It is a set of separate plans, and the ones available to you depend on where you live.
How a formulary works
Every Part D plan publishes a formulary, its list of covered medications, organized into tiers. The tier a medication sits on determines how the plan handles your share of the cost.
A plan is not obligated to cover every drug in existence. It is required to cover a required range of categories, but within that, plans make their own choices about which specific medications are on the list and where.
Plans may also apply management rules to certain medications, things like requiring approval before the prescription is filled, requiring you to try an alternative first, or limiting the quantity dispensed at one time. Those rules vary by plan and by drug.
Formularies can change between plan years. A medication handled one way this year may be handled differently next year, which is why the fall review exists.
Why the same prescription can sit differently on different plans
This is the single most useful thing to understand about Part D, and it is the reason comparing plans on premium alone is a mistake.
Take one medication and check it against three plans. It may be on the formulary of all three and sit on a different tier in each. It may carry a management rule on one and not the others. It may be absent from one entirely. Same drug, same person, three different outcomes.
Multiply that by five or eight medications, which is common, and the differences compound quickly. A plan that looks inexpensive on paper can be the wrong plan for your particular list, and a plan that looks more expensive can be the right one.
The late-enrollment penalty and how it is triggered
Medicare applies a penalty to people who go without creditable prescription drug coverage for a period after first becoming eligible, and then enroll later. Creditable coverage means coverage that Medicare considers at least as good as Part D, some employer and retiree plans qualify, and your plan administrator can tell you whether yours does.
The important characteristics of this penalty are that it is calculated based on how long you went without, it is added to what you pay each month once you do enroll, and it generally lasts for as long as you have Part D coverage.
People most often trigger it by assuming Part D is unnecessary because they take no medications at 65. That is understandable and it is also the most common expensive mistake in Medicare. If you are not sure whether coverage you already have counts as creditable, that is worth a phone call before your window closes rather than after.
Where drug coverage comes from
Structurally, there are two routes. Drug coverage is either arranged as its own separate policy, or it is administered as part of the plan you enroll in, which of those applies depends on the overall structure you choose.
Bring your prescription list, here is what Sue reviews
Write it down before you call. Five minutes of preparation makes the conversation substantially more useful.
Every medication
Name, dosage and how often you take it. Include anything seasonal or occasional, not just the daily ones.
Your pharmacy
Where you actually fill prescriptions, and whether you use mail order. Pharmacy arrangements differ between plans.
Any coverage you have now
Employer, retiree or union coverage, and whether it has been confirmed as creditable.
Where to find official cost figures
Higher-income households may also see an income-related adjustment applied to Part D, based on a tax return from two years earlier. Ask Sue about how IRMAA works.
Common questions about Part D
Have your list checked, drug by drug.
It is the only way to know how a plan handles what you actually take.
Sue Kneeland Insurance is an independent, licensed insurance agency and is not connected with or endorsed by the United States government or the federal Medicare program.