Medicare is a national/federal health insurance program in the United States. It has an enormous reach and covers four categorically defined plans under one umbrella. The insurance plans are divided into Part A, B, C and D. Today we will explore the advantages and costs of Medicare Part D.
Let’s start by understanding the advantages of enrolling for Medicare Part D and proceed into the premiums and costs to the beneficiaries. Medicare Part D went into effect on January 1, 2000. The plan was proposed by President Clinton and enacted as part of the Medicare Modernization Act of 2003. The MMA or Medicare Modernization Act established a standard drug benefit that all part D plans must offer. It states that all individuals who are signed up for Medicare Part A and/or Part B are eligible for mostly self administered prescription drug coverage.
The plan offers standalone Prescription Drug Plan (PDP) for drug coverage only or the beneficiary can join a public Part C health plan that jointly covers all hospital and medical services including but not limited to prescription drug coverage. Plan D covers different benefit structures and each plan chooses which drugs they wish to cover. The plans do however, cover at least two prescriptions drugs in the 148 categories of different drugs.
Premium: The average Plan D premium for the year 2018 is $34. This may however change based on your choice of drug coverage structure and on the State you live in. Also, if you don’t sign up for Part D when you’re first eligible, you may have to pay a Part D late enrollment penalty. There is an additional clause that higher income consumers may have to pay more as premium for Medicare Plan D.
More information on Medicare Part D
The table below will give you a visual of how much an individual must pay as part of the plan D premium based on his or her income as declared while filing his or her income tax returns.
| Individual Income: | Joint Income: | Part D Monthly Premium: |
| $85,000 to $107,000 | $170,000 to $214,000 | $13 |
| $107,000 to $133,000 | $214,000 to $267,000 | $33.60 |
| $133,000 to $160,000 | $267,000 to $320,000 | $54.20 |
| Over $160,000 | Over $320,000 | $74.80 |
Deductibles, copayments and coinsurance:
Most Part D plans also have an annual deductible. This is the sum you must pay out of your own pocket before the plan starts to cover your drugs. The maximum deductible amount is $405. Bear in mind that some plans have $0 deductibles, so one must choose wisely when enrolling under part D plans.
Some plans have a fixed dollar amount when it comes to copayments. Others make you pay a certain percentage. This is a sum you pay when you purchase the prescription drug from the pharmacy. This sum depends upon the drug you choose to buy. It depends upon factors such as whether or not the drug is a generic brand or if the drug has a specific brand name. In 2013, the standard benefit required a $325 deductible payment by the beneficiary, then required 25% coinsurance payment by the beneficiary of drug costs up to an initial coverage limit of $2,970. Once this initial coverage limit is reached, the beneficiary had to pay the full cost of his/her prescription drugs up until the total out-of-pocket expenses reached $5,000 (excluding premiums and any expense paid by the insurance company) minus a 52.5% discount in this gap, referred to as the “Donut Hole”.
Once the beneficiary reaches this threshold he or she is eligible for catastrophic coverage. During catastrophic coverage, the beneficiary pays the greater of 5% coinsurance, or $2.65 for generic drugs and $6.60 for brand-name drugs.
For instance, you may have to pay $5 for a generic drug, $25 for a preferred brand name drug and $40 for a non-preferred brand name drug.
There are many plan structures under the part D program making the decision of choosing a plan for yourself slightly arduous. One must assess his or her drug needs carefully before signing up for specific programs under the Medicare Part D Plan.
Read more about the hows and whats of medicare part D. You can also contact our experts here at Flagship Financial for professional consultation on Medicare part D
