Prior to 2006 prescription drug coverage was not made available to those individuals enrolled into Medicare. As a result of increased drug cost the Federal Government implemented a new program called Medicare Part D.
Medicare beneficiaries who purchase Part D coverage are now able to help control their prescription drug cost and similar to their prior group health insurance plan, you are able to pick up your prescription at a local retail pharmacy or submit a mail order. Under a Part D plan you now pay a copay or shared percentage of the drug cost depending on what tier the each drug falls under (Generic, Brand Name, Specialty). Prior to 2006, people on Medicare were required to pay the full out-of-pocket cost for their over the counter medications.
While the Medicare Part D program is voluntary, if you delay signing up for your Part D coverage and you do not have creditable coverage through your employer you could face lifetime penalties.
How much is Medicare Part D?
Your monthly premium for Medicare prescription drug coverage is only one portion of the cost to consider when purchases Part D coverage.
Many of our clients want the lowest cost premium. While this may seem like a good idea, if you are someone who is on a lot of medications, the cost to purchase those medications can end up costing you thousands more than a plan that cost a few dollars more than the cheapest plan.
When we help our client find a plan that is best for them, we look at the overall cost of the plan. On top of the monthly premium, we also review things like your deductible amount, copays, and total annual cost for all medications for each insurance plan that is available.
In addition we also focus on which Medicare insurance carriers are available to you. There are Part D insurance carriers that are here today and gone tomorrow. There are also insurance carriers that are difficult to get on the phone to obtain needed answers to basic questions. We help guide you to Medicare insurance carriers that have a good reputation in the industry.
Let’s break these cost individually for you.
Monthly Part D prescription drug plan premiums vary depending on the specific plan that you choose. In addition, it is very rare for an insurance carrier to keep their plan pricing the same year after year. You can expect your pricing to increase of decrease each year. This is one of the big reasons to pick a plan that offers fairly consistent pricing and coverage.
In 2021, there are many Medicare Part D plans to choose from in each state. For instance in the Los Angeles County area of California there are up to 30 different Part D drug plan options. We did a quick search for plans available in the 90808 area and Part D Plan monthly premiums range from as low as $7.20 to $130.40.
In 2020 the cost spread looked like the following: $12.80 to $118.40. We have no idea what 2022 plan pricing will look like as of today. However if you purchase the $7.20 plan for 2021 I would say you can be almost 100% certain you are going to see a large increase in 2022. The lowest priced plan is from a company that just entered into CA in 2021 and based on our findings, are only in a handful of State.
Every insurance company has what is know as a prescription drug formulary. The formulary shows which prescription drugs will be covered and in what tier they will be covered in. Each year Medicare Part D insurance carriers are allowed to adjust these formularies. What does that mean to you? You need to keep a watchful eye to see how your prescription drugs will be covered from year to year.
The lowest monthly premium Part D plan may have higher drug cost. When we run a complete cost comparison many time we find the plan that is 8th down from the lowest priced plan, will end up costing you least overall.
If you are not taking any medications today this could be the only time where picking the lowest cost plan could make sense.
There is one factor that could change how much your monthly Part D premium is. This is a seperate fee for Medicare beneficiaries who were classified as a higher income wage earner. This fee or surcharge is in addition to your plan premium and is assessed by the Social Security department. There is a regulation known as IRMAA, which allows Social Security to charge an additional fee depending on how much you made. Your income calculation is based on your taxes you filed from 2 years ago (2021 Plan year they would look at your 2019 income taxes). This surcharge ranges from $12.30 per month to $77.10 per month for 2021 plan year. You can read more about IRMAA costs on our Medicare cost page.
Depending on how much your employer health plan paid as related to prescription drugs, you may not think about your cost when you purchase prescription drugs from your local pharmacy. If you were with a large employer your prescription drug cost could have been zero dollars when you purchased your drugs.
Now that you are with Medicare you do not have a added benefit of being under a large group plan. That being said Part D Insurance Carriers do offer some pretty decent prescription drug coverage. You will want to review your plans summary of benefits to see how much your prescription drug deductible, copays, and co-insurance will be.
Part D prescription drug plan deductibles are established by The Center for Medicare and Medicaid Services each year. This means a Medicare Insurance Carrier is not allowed to charge more than the allowable amount, but can charge a lower amount.
In 2022, your Part D deductible is $480. This means that each insurance company can require up to a $480 deductible before your prescription drug benefits begins. As mentioned the insurance company can charge a lower deductible or no deductible if they chooses to do so. This can be common for your Tier 1 and Tier 2 drugs where they waive your deductible and only apply a deductible for Tier 3 and Tier 4 drugs.
Medicare Part D plans will breakdown their copay cost into 5 and sometime 6 tiers for their medications in their formularies.
The insurance company will set the copay for each tier. For example, one company might charge a $1.00 copay for Tier 1 medications, while another charges $5. This is why it’s important to review the plan’s formulary to make sure your medications are covered and to know what you can expect to pay for those medications.
At Integrity Now Insurance Brokers, we assist our Medicare Advantage & Medicare supplement clients with the needed research to be able to select the most beneficial Part D plan on an annual basis. This is important because remember: with 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.
Reviewing your Part D coverage for either your Standalone plan or your Medicare Advantage plan is very important. As your prescription drug cost can skyrocket if you leave it alone without checking all of your cost.
If you are struggling to keep up with all of your monthly expenditures, you may want to look into a program to help cover some of your Medicare insurance cost. The federal government created a program referred to as the Low-Income Subsidy.
As a Medicare beneficiary you can and should apply for a Low-Income subsidy through your local Social Security office if you believe you might qualify. Help is awarded based on your ability to prove that you meet the low-income guideline and/or have limited resources.
The guidelines states that you must have an annual income that falls below 150% of the Federal Poverty Level based on your household size.
What items can a Low-Income Subsidy cover for those individuals who qualify:
There are currently four different subsidy levels that you may qualify for. These levels are broken down into the following percentages: 25%, 50%, 75% & 100%. The higher the percentage the more the government will pay towards your cost related to Part D benefits.
As much as we would love to help you with this process. Unfortunately, we are unable to assist you in conducting this research, helping you complete the required applications, or saying if you qualify or not. We are only allowed by Medicare, to point you in the right direction. It will then be your responsibility for you to reach out to your local Social Security office and find out how to apply and learn all of the details about the program.
Medicare Part D is a voluntary program but without it you will be responsible to pay for 100% of the total cost of your prescription medications that you need down the road.
If Medicare will be your primary coverage, we highly recommend that you enroll into a Part D plan when you first become eligible at age 65.
Many people who are still working at age 65 delay their enrollment into Part D until they retire. As long as your employer insurance has drug coverage that is as good as or better than Medicare Part D, you can delay enrollment without penalty.
Veterans who are covered through the VA Healthcare system, do not need to sign up for Part D coverage as Medicare has determined that this is considered credible coverage through the VA.
You can enroll in Part D directly with a Medicare Part D insurance carrier or through an insurance agent that specializes in Medicare products.
Enrolling through an independent insurance agent means you will have back-end support if you run into any hiccups, such as prior authorization requirements or drug exceptions. In addition, by using an insurance Agent / Broker, we are not tied to a single insurance carrier or product that we have to sell. We have the flexibility to offer you every available plan and carrier in the marketplace that we represent.
It is also important to mention that Medicare Part D plan are limited to your specific plan service area where you live. This means you can’t obtain a Part D plan that may cost less in another State or county that falls outside of your local area like Los Angeles County or Orange County. These two counties would fall under two different service areas.
Most Medicare Advantage plans include Part D drug coverage under their plans. While this may sound great as it is all bundled together for you, this means that you are limited to a single Part D plan and have no secondary option. It’s important to check exactly which medications a Medicare Advantage plan includes before enrolling into it. Be sure that your plan covers the medications you need on an annual basis as Part D plans change their formulary from year to year and this includes Medicare Advantage plans.
We have noticed that Part D plans will cover a medication under Tier 2 which could cost $5 to fill at your local pharmacy. In the following plan year they have been known to move that same prescription drug to Tier 3 or Tier 4. Tier 3 could cost $25 or more and Tier 4 might cost you $100. This doesn’t factor in the possibility of your Part D carrier, deciding not to cover the drug all together. This is why it is important to check your plan for changes each year.
If you are enrolled into a Medicare Advantage plan you are not allowed to be enrolled into a seperate Part D plan. You cannot be enrolled in both a Medicare Advantage plan and a separate Part D plan at the same time. If you are enrolled into a Medicare Advantage plan and you decide to enroll into a standalone Part D plan you will automatically be disenrolled from you Medciare Advantage plan and enrolled back into Original Medicare. If this happens you will need to obtain a Medigap policy which may require medical underwriting from the insurance carrier.
Medicare has established enrollment period for joining a Medicare Part D plan. Depending on your specific situation will depend on when you can enroll. For instance, you are eligible to enroll into a Part D plan when you first get Medicare. This is known as your Initial Enrollment Period (IEP). This period lasts for a total of seven months.
Your Initial Enrollment Period begins three months before you turn 65, includes the month o your birthday, and the three months following your birthday month. A similar window exists for people who first become eligible for Medicare due to disability.
If you have a Medicare Advantage plan you might be aware that there is an annual election period which runs from October 15 – December 7. Your Part D prescription drug plan falls into this same annual election period. During this time, you can enroll or disenroll from any drug plan.
This was established to provide you with the time needed to review all plan changes your carrier and all other Medicare insurance carriers make each year. As part of your annual review, you will want to review the following Part D plan’s benefits changes:
All changes to your Part D plan go into effect on January 1 of the following year.
Medicare requires for each Insurance Carrier to send out an an Annual Notice of Change each year. You can expect this notice to arrive during the month of September of year plan year. The notice of change will outline in detail everything that is changing with your plan for the following year. Typically they will show a side by side comparison showing your current coverage to the upcoming plan year coverage.
You are not required to re-sign up for Part D, if you are staying with the same plan. Your current Part D drug plan will automatically renew on January 1st if you are happy with your current plan. However, if you find a different Part D plan or new Medicare Advantage plan that better suits your needs you will be require to complete a new application for that specific plan or carrier you are moving to.
Medicare Part D plans are similar to your Medicare Advantage plans, in that you are enrolled into the plan for the entire plan year. You are not able to make any changes unless you qualify for what Medicare calls a Special Election Period. These period fall outside of the normal October 15 to December 7 annual enrollment period.
Medicare has learned there may be circumstances that will require a mid year change. Because Medicare Part D and Medicare Advantage plans are tied to a local service area like Los Angeles County, if you move outside of your local service area your plan is require to dis-enroll you from your current plan. As a result of this Medicare requirement, they created a special enrollment period so you can sign up for a new plan.
If you fall into one of these life situations, it will be important that you identify on your application for your new Part D plan or Medicare Advantage plan the correct qualifying event or your application will not be approved by the insurance carrier.
Working with a Medicare Insurance Agent who specializes in Medicare and these situations will be very important to ensure you don’t end up without coverage. There is a very small window of time to complete your special enrollment period so make sure you don’t delay.
As you might be aware of by now, there are a ton of different ways to obtain your Part D prescription drug plans. You can either obtain them on a standalone plan if you are not enrolled into a Medicare Advantage plan or you can leave Original Medicare and sign up for a Medicare Advantage plan that includes the Part D coverage.
Fortunately, we have access to several comparison tool which allows us to evaluate each plan based on your individual Medicare needs. These tools help us quickly identify which plans offers coverage for your specific medications and what your total cost might be related to your copays and the Part D premiums.
Here at Integrity Now Insurance Brokers, we are happy to provide you with the help you need at no cost to you. For any client who have a Medicare Supplement plan with us we are here to help you navigate your Part D plan needs. We’ll will review your Part D plan on an annually basis at your request to ensure you are still covered under the right plan for you. Give us a call at (562) 735-3553 x 1