Prescription Drug Coverage Under Medicare

Many seniors take prescription drugs. Unfortunately, some don’t realize prescription drug coverage is not included with Original Medicare. Prescription drug coverage usually needs to be purchased separately under Medicare Part D.

Prescription drugs can be expensive without insurance coverage and many seniors can’t afford routine large out-of-pocket payments. It’s crucial for seniors to learn about the different Medicare prescription drug coverage options available to them and how to select the option that best meets their needs.

Prescription drugs are excluded from Original Medicare

One of the biggest misconceptions about Medicare is that Original Medicare (Medicare Parts A and B) includes prescription drug coverage. This is not true. Original Medicare only helps pay for covered services at the hospital and doctor’s office and does not help pay for standard prescription medications you’d pick up at a pharmacy.

It’s important to remember that Original Medicare does not cover everything, and additional coverage may be necessary to keep your out-of-pocket healthcare costs to a minimum. If you want insurance for your prescription drugs, you’ll need to enroll in either a standalone Medicare Part D plan or a Medicare Advantage Plan that includes prescription drug coverage.

What is Medicare Part D?

Medicare Part D is Medicare’s standard prescription drug coverage. Part D plans are standalone plans administered by private insurance companies. They work alongside Medicare Parts A and B to help cover some of the costs associated with prescription drugs.

Under Medicare Part D, you’ll pay a monthly premium for the plan. Your plan will offer coverage on a select list — or formulary — of medications provided by a network of pharmacies. When you purchase drugs, you’ll be responsible for a copayment or percentage of the drug’s cost instead of the full price of the prescription.

There are many different Medicare drug plans available. Each plan will have its own formulary approved drugs separated into tiers. Plans will also differ when it comes to costs, as your monthly premium, annual deductible and copayment/coinsurance per prescription tier can all vary. The plans available to you will usually depend on where you live and which insurance providers service your area.

The following costs may be associated with your Medicare Part D plan:

· Monthly premium: Each plan will set the amount you’ll pay per month to maintain prescription drug coverage. These premiums will vary depending on your plan’s benefits.

· Annual deductible: Some prescription drug plans require you to meet a deductible (a minimum out-of-pocket limit) before drug coverage kicks in. You’ll pay full price until you reach this limit. There are caps on the deductible amounts insurance providers can require. Some providers require a partial deductible, while others don’t require one at all.

· Prescription cost: Once your initial drug coverage begins, you may be expected to pay a certain amount for each prescription you purchase. This will either be a flat copayment per drug or a percentage of the medication’s cost.

· Medicare Prescription Payment Plan: In 2025, you can spread out your prescription drug costs over the year using the Medicare Prescription Payment Plan. For example, if you have one prescription that costs $300 every three months, you now have the option to pay $100 per month — the same $1,200 over a year, but in smaller pieces. There is no charge for this program.

· Catastrophic coverage: In 2025, once your out-of-pocket spending reaches $2,000 (including certain payments made by other people or entities on your behalf, including Medicare’s Extra Help program), you’ll automatically get “catastrophic coverage.” This means you’ll pay nothing for your covered Part D drugs for the rest of the calendar year. This 2025 update to Medicare Part D also removed the previous “coverage gap” and its associated costs.

How much you end up paying for prescription drug coverage will ultimately depend on how many prescription drugs you require and what types of medications you need. Certain medications might fall into an expensive tier in your plan’s formulary.

The costs and formulary associated with a plan can also change year after year, or even during the year if drug therapies change, new drugs are released, or new medical information becomes available. Your plan will inform you of upcoming changes and when those changes will take effect (at least 30 days before the change becomes effective).

Medicare participants have the option to switch to a different Medicare Part D plan during certain parts of the year. This means that you aren’t locked-in to one Part D plan — you can change your plan during the Annual Enrollment Period and during other qualified special enrollment periods.

Do you need Medicare Part D?

Medicare Part D is optional for seniors enrolled in Medicare Parts A and B — you do not have to enroll in Part D at the same time you enroll in Original Medicare, or ever. However, if you do enroll in Part D after your Initial Enrollment Period, you may be subject to a late enrollment penalty that you’ll pay for as long as you have Part D coverage.

Some seniors decide not to enroll in Medicare Part D when they enroll in Original Medicare because they aren’t taking any prescription medications. However, it’s important to remember that healthcare needs change — if you later end up with a health problem that requires prescription drugs, it could result in higher out-of-pocket costs. Because of those permanent late enrollment penalties, you may end up paying more per month by enrolling in Part D later rather than enrolling in a low-cost plan right away.

If your current Part D plan isn’t meeting your needs, you can switch to a different plan during the Annual Enrollment Period (AEP) each year. It’s a good idea to look at your current and projected prescription drug costs and compare those to plans available to you before each AEP.

How does drug coverage work with Medicare Advantage?

If you enroll in a Medicare Advantage plan (Medicare Part C), your prescription drug coverage may look a little different. That’s because many of today’s Medicare Advantage plans include Part D prescription drug coverage.

Keep in mind that if you are enrolled in a Medicare Advantage plan that has built-in drug coverage, you cannot also enroll in a standalone Part D plan for additional coverage. Enrolling in a Part D plan while under this type of Medicare Advantage plan will automatically disenroll you from your Medicare Advantage plan and put you back on Original Medicare.

There are some types of Medicare Advantage plans that do allow you to enroll in a Part D plan in addition to Part C. These plan types include private fee-for-service and medical savings account plans.

You may find it worthwhile to look into your Medicare Advantage plan’s drug coverage and compare those costs to the costs of Original Medicare plus a Part D plan.

How to choose the right prescription drug plan

If you decide to enroll in a Medicare prescription drug plan, you’ll want to explore all your options to find the right plan that meets your needs for the year. You might have a large number of plans available to you, so be sure to do your research and compare costs.

Make sure you look into the following when selecting a Medicare prescription drug plan:

· Whether the plan covers prescription drugs you currently take.

· How much your copayments will be for any drugs you currently take.

· How much you’ll pay in monthly premiums.

· Whether the plan’s network includes pharmacies that are convenient to you.

· Whether the plan has restrictions on certain drugs you take.

Remember, different plans will work best for different seniors in different years. Take the time to compare Part D plans. It’s a smart way to determine whether your current prescription drug coverage is appropriate for your health now and moving forward.

Choosing a Medicare prescription drug plan doesn’t have to be intimidating. If you have questions or want to explore your Part D plan options, contact PlanEnroll. We have access to a wide range of plans, and our licensed insurance agents can help you find the right coverage for your needs. We’re here to assist you.

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