Medicare Part D Prescription Drug Coverage is coverage for retail prescription drugs, or the medications that you pick up at a pharmacy. This is a voluntary program which allows you to access medications at an affordable rate, and insures yourself against any prescriptions you may need future.

Medicare Part D costs vary depending on the specific drug plan chosen. Generally, you are responsible for paying a monthly plan premium, and then deductibles and copays (or coinsurance) for your medications. People with higher incomes may have to pay more for the cost of their plan.

There are many Medicare Part D plans to choose from, with plans ranging from $15.00 – $100.00 on up. Choosing your drug plan should never be based purely on the plan’s monthly premium because every plan has its own separate premium, drug formulary, and copay.  Just enrolling in the cheapest plan without checking the plan’s formulary could lead you into paying higher out of pocket costs for the year. This could be an expensive mistake especially if you learn later that the plan does not cover one of your medications. Remember, the least expensive monthly premium is not necessarily the least expensive plan when figuring in total prescription costs. Also, do not forget, all Part D plans, the benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year.

Extra Help

The federal government offers help with paying for your Part D drug plan and paying for your medications if you qualify and is based on income. This is what is called a Low-Income Subsidy. Anyone can apply for this from Social Security at any time. Help is only awarded based on proving low-income and limited resources. You must have an annual income that falls below 150% of the Federal Poverty Level based on your household size.

Beneficiaries who qualify may receive assistance with paying their monthly Part D premiums, their annual Part D deductible, and also their co-payments on retail medications. There are different levels of qualification, and your subsidy level generally determines how much assistance you will get you’re your premiums. Someone qualifying with a full subsidy would have 100% of their Part D premium paid for, up to the benchmark allowed by Medicare for that particular year.

The Gap – (Donut Hole)

The Medicare coverage gap, or “Donut Hole”, is a phase of your Medicare Part D Prescription Drug Plan benefit when there is a gap in the prescription drug coverage. During this phase, you will have to pay more for your drugs, until you reach the catastrophic coverage phase. This coverage gap is reached when your initial phase total drug costs (what you and your plan pay) reach a $3,700 for 2017. You then pay for your prescriptions out of pocket until entering the plan’s catastrophic coverage phase. This third phase is when your total out-of-pocket costs, including the annual deductible and co-payments/coinsurance, reach $4,950 in 2017.

Some Medicare Advantage Prescription Drug plans and stand-alone Medicare Prescription Drug Plans provide partial or full coverage during the coverage gap. For example, some plans may not have a gap at all, while others may offer generic drug coverage in the gap. Plans with gap coverage may charge a higher monthly premium, so you should only consider one of these plans if you have high prescription drug costs and know you will reach the coverage gap.