MEDICARE PART D – Prescription Coverage

Part D of Medicare is an optional program and coverage is available through private insurance companies.  These companies are contracted by Medicare. This means that costs and availability may be different between plans and companies. Location also plays a factor in plan choices and options.

Here is everything you need to know to pick the right plan and protect your budget.

Two Ways to Get Covered

You don’t buy Part D directly from the government. Instead, you choose one of two paths:
  1. Standalone Prescription Drug Plans (PDP): If you have Original Medicare (Part A and Part B), you can add a separate Part D plan to cover your meds.

  2. Medicare Advantage Plans (Part C): Many “all-in-one” Medicare Advantage plans include drug coverage automatically. Just keep in mind that not every Advantage plan includes it, so always double-check the fine print!

The “Tier” System: How Much Will You Pay For Prescriptions?

Most plans use a formulary, which is just a fancy word for a list of covered drugs. To help you understand costs, plans group these drugs into “tiers.” Usually, the lower the tier, the lower your out-of-pocket cost:
  • Tiers 1 & 2 (Generic): Your most budget-friendly options.
  • Tiers 3 & 4 (Brand Name): Preferred brands cost less; non-preferred brands will cost you more.
  • Tier 5 (Specialty): This is for high-cost or injectable medications.

What Happens if a Drug Isn’t Covered?

Sometimes a plan might place restrictions on a medication. You might encounter:
  • Prior Authorization: Your doctor must prove the drug is medically necessary before the plan covers it.
  • Step Therapy: The plan may ask you to try a more affordable, similar drug before “stepping up” to a more expensive version.
  • Quantity Limits: A limit on how much medication you can receive at one time.
Don’t panic if your drug isn’t on the list. You and your doctor can file an appeal or request a “coverage exception” to get the medication you need.

Can You Get Financial Help?

If you have limited income, you may qualify for the Extra Help program. This program assists with premiums, deductibles, and coinsurance. You might even qualify automatically if you are already enrolled in Medicaid or receive Supplemental Security Income (SSI).

When Can You Sign Up?

You can’t join a Part D plan at just any time. You must wait for a specific enrollment window:
  • Initial Enrollment: The 7-month window around your 65th birthday.
  • Annual Enrollment (AEP): Every year from Oct. 15 to Dec. 7. This is the best time to review your plan and switch if costs have changed.
  • Medicare Advantage Open Enrollment: Jan. 1 to March 31.
  • Special Enrollment (SEP): Available if you lose your current coverage or move to a new area.

Do You Have to Enroll Part D?

As a Medicare recipient you have the option of enrolling in Medicare Part D to get help with your prescription drug costs. Some refer to Medicare Part D as “prescription drug coverage.” You may even hear Medicare Part D simply referred to as a “drug plan.”

Medicare Part D is optional and  you don’t have to enroll. However, if you don’t enroll when you are first eligible,  you could possibly find yourself paying more in premiums due to a late enrollment penalty.  If you’re not taking prescription medications, it is still better to sign up for Medicare Part D when you’re first eligible to avoid this penalty. .

Summing It All Up

  • Medicare Part D offers prescription drug benefits to Medicare recipients. Many insurance companies offer Part D programs. Each company creates its own formulary of which drugs it will cover and the cost.
  • Participation in the program is voluntary. However, seniors who do not enroll when they are first eligible may encounter late penalties and wait times when they do choose to enroll. Medicare beneficiaries who wait to enroll are responsible for paying the full cost of their medications until they are eligible to enroll unless they have other coverage such as through an employer or the VA.