DIFFERENT STAGES OF MEDICARE PART D

In 2024 the Medicare Part D Deductible will be $545.  During this initial phase of Medicare Prescription Drug Coverage which is called Medicare Part D (D for Drugs) all of the costs are the responsibility of the Medicare Beneficiary with no help from either your Part D Insurance carrier or from the drug manufacturers.

Simply put, in the deductible phase, the Medicare Beneficiary must pay their plan price for their prescription medications until they have satisfied the $545 deductible for the 2024 Plan year. 

Each Drug plan has its own standards for pricing.  Some will have no Deductible pertaining to Tier 1 or Tier 2 Medications.  Some will have a deductible for all Tiers, it just depends on your individual plan.  If this sounds complicated, it really isn't if you are used to the Medicare ways of doing things, but working with a Medicare Agent or Broker helps a ton.

After you give your Agent/Broker a list of your Prescription Medications he/she will list them in the Medicare Prescription Drug Search Tool in order to see which plans in your area have the lowest combined costs for your medications and for what premium you would pay for the plan you choose. 

 

As soon as you have reached your deductible for the year ($545) you enter the 2nd phase of Medicare Part D.  

In the Initial Coverage Phase, both you and your Part D Plan will share the costs of your Medications.  This is done by having pre-set amounts referred to as either Co-Pays or Co-Insurance, depending on the plan.  For example, there may be a $2.00 Co-Pay for Tier 1 Medications, meaning anytime you fill a prescription for a covered drug in Tier 1 it will cost you $2.00.  A Tier 2 Medication may be $5.00 - $20.00, meaning you are responsible for a $20 Co-Pay for each Tier 2 medication.

In Tier 3 you will either have a Co-Pay or Co-Insurance.  A co-pay works just like we explained in the previous paragraph.  But, Co-Insurance pertains to a percentage.  This means you might pay 38% of the cost of your Prescription while your Part D plan pays for the other 62%.  Again, each plan sets its own amounts for each phase.  All plans are reviewed and approved by Medicare before they can be marketed by agents and Brokers.  

You will be in the Initial Coverage phase until you have reached the $5,030 threshold. If/When you hit the $5,030 amount, you will then enter into the Catastrophic or 4th Phase of Medicare Part D.

There are plenty of Medicare beneficiaries who never hit this phase, so if that is you consider yourself fortunate. 

 

 

Once you reach the Coverage Gap, you'll pay no more than 25% of the cost for your plan's covered brand-name prescription drugs. You'll pay this discounted rate if you buy your prescriptions at a pharmacy or order them through the mail. Some plans may offer you even lower costs in the coverage gap. The discount will come off of the price that your plan has set with the pharmacy for that specific drug. 

Although you'll pay no more than 25% of the price for the brand-name drug, almost the full price of the drug will count as out-of -pocket-costs to help you get out of the coverage gap. What you pay and what the manufacturer pays (95% of the cost of the drug) will count toward your out-of-pocket spending. Here's a breakdown:

• Of the total cost of the drug, the manufacturer pays 70% to discount the price for you. Then your plan pays 5% of the cost. Together, the manufacturer and plan cover 75% of the cost. You pay 25% of the cost of the drug.
• There’s also a dispensing fee. Your plan pays 75% of the fee, and you pay 25% of the fee.

What the drug plan pays toward the drug cost (5% of the cost) and dispensing fee (75% of the fee) aren't counted toward your out-of-pocket spending.

Example:

 Mrs. Anderson reachedcounts the coverage gap in her Medicare drug plan. She goes to her pharmacy to fill a prescription for a covered brand-name drug. The price for the drug is $60, and there's a $2 dispensing fee that gets added to the cost, making the total price $62. Mrs. Anderson pays 25% of the total cost ($62 x .25 = $15.50). 

The amount Mrs. Anderson pays ($15.50) plus the manufacturer discount payment of $42 ($60 x .70 = $42) count as out-of-pocket spending. So, $57.50 counts as out-of-pocket spending and helps Mrs. Anderson get out of the coverage gap. The remaining $4.50, which is 5% of the drug cost ($3) and 75% of the dispensing fee ($1.50) paid by the drug plan, doesn't count toward Mrs. Anderson's out-of-pocket spending.

If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan's coverage has been applied to the drug's price. The discount for brand-name drugs will apply to the remaining amount that you owe.

You exit the Coverage Gap (Donut Hole) Phase of Medicare Part D as soon as you hit $8,000 In Drug Costs this is when you enter the Catastrophic Phase of Part D. 

 

THE 4TH and FINAL STAGE OF MEDICARE PART D IS THE CATASTROPHIC PHASE OF MEDICARE PART D

Only about 4% of all Medicare Beneficiaries will ever enter into this phase of Medicare Part D.

You will pay nothing for your medications in the Catastrophic Phase.  20% of the costs are paid by your Part D Insurance Plan and the other 20% are paid by Medicare.

Next year in 2025, the Catastrophic Phase will be reduced from $8,000 all the way down to $2,000. 

 

Medicare will pay 75% of the price for generic drugs during the coverage gap. You'll pay the remaining 25% of the price. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.

Example:

Mr. Evans reaches the coverage gap in his Medicare drug plan. He goes to his pharmacy to fill a prescription for a covered generic drug. The price for the drug is $20, and there's a $2 dispensing fee that gets added to the cost. Mr. Evans will pay 25% of the plan’s cost for the drug and dispensing fee ($22 x .25 = $5.50). The $5.50 he pays will be counted as out-of-pocket spending to help him get out of the coverage gap.

If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan's coverage has been applied to the drug's price. 

 

• Your yearly deductible, coinsurance, and co-payments
• The discount you get on brand-name drugs in the coverage gap
• What you pay in the coverage gap

 

 

• The drug plan's premium
• Pharmacy dispensing fee
• What you pay for drugs that aren’t covered

 

 

If you think you've reached the coverage gap and you don't get a discount when you pay for your brand-name prescription, review your next "Explanation Of Benefits (EOB). If the discount doesn't appear on the EOB, contact your drug plan to make sure that your prescription records are correct and up-to-date.

If your drug plan doesn't agree that you're owed a discount, you can file an appeal.