What Is Prescription Drug Coverage? (Medicare Part D)

When it comes to healthcare, Medicine and drug expenses can take a toll on your mind. But is there a way out? Sure there is! Prescription drug coverage. There are different kinds of insurance companies providing different plans for prescription drug coverage. 

Prescription drug coverage, also known as Medicare Part D, is a type of health insurance provided by private companies in contract with Medicare. It helps cover the cost of prescription medications. Coverage types include standalone Medicare Part D plans, Medicare Advantage Prescription Drug plans, employer or union health plans, and Medicaid. Costs vary based on plan type, drug types, and preferred pharmacy.

What are the Different Types of Prescription Drug Coverage?

Some common types of Prescription drug coverage are:

  1. Medicare Part D: Medicare Part D is a standalone plan that you can integrate with Medicare Parts A and B and often Part C to cover pay for prescription drugs. You pay Medicare Part D premiums, deductibles, and copays in addition to Part A and Part B premiums.
  1. Medicare Advantage Prescription Drug (MA-PD) plan: This is a type of Medicare Advantage plan, offered by private companies and it covers both health and drug coverage.
  1. Employer or union health plan: This is a health plan that you get from your current or former employer or union. These plans might also include prescription drug coverage.
  1. Medicaid: This is a state cum federal program that provides health insurance to people in the low-income group. This program might include prescription drugs as part of their plan.

How Does the Affordable Care Act (ACA) Impact Prescription Drug Coverage?

The Affordable Care Act (ACA) is a healthcare reform law that created the Medicare Part D coverage gap or Donut hole. This donut hole is a temporary limit on how much Medicare can pay on your prescription drugs.

Earlier, you had to pay 100% of your prescription drug bills once you reached the coverage gap and you pay that full amount until you reach a catastrophic coverage level. ACA declined the bill that you pay when you reach the coverage gap. 

ACA helps Medicare Part D enrollees who are in the coverage gap and expands Medicaid eligibility and benefits for low-income adults.

What is the Significance of Employer-Sponsored Insurance and Individual Health Insurance Marketplace?

Employer-sponsored insurance is when an employer offers you a health insurance plan in which the employer pays some of the premium and the rest is paid by you. 

The individual health insurance marketplace is created by the Affordable Care Act (ACA) where individuals can shop for and compare health plans that meet certain standards of quality and affordability.

Both programs might or might not offer prescription drug coverage. 

 How Much Does Prescription Drug Coverage Cost?

The cost of prescription drug coverage varies from plan to plan. However, the average national premium for prescription drug coverage is around $32.74. 

Factors that affect prescription drug coverage cost are:

  1. Type of plan: The cost of prescription drug coverage depends on the type of plan that you choose such as Medicare Part D, Medicaid, employer-sponsored insurance, etc
  2. Type of Drugs: The cost of your prescription drug coverage will depend on the type and availability of the drugs. Also, It will depend on your plan’s formulary and your preferred pharmacy.
  3. Your preferred pharmacy: Different pharmacies can charge you differently based on your plan and their contract with the drug distributor. Some plans might contract with preferred pharmacies to offer lower copayments and coinsurance. 

How Do I Get Prescription Drug Coverage?

These are the steps to get prescription drug coverage:

  • Enroll on the Medicare Plan Finder or visit the plan’s website.
  • Fill up the paper enrollment form.
  • Call the plan.
  • Call 1-800-MEDICARE (1-800-633-4227). TTY: 1-877-486-2048.

How Do Prescription Drug Formularies and Tiers Affect Costs?

A formulary is a list of drugs that a plan covers and a tier is a level of cost-sharing that applies to a group of drugs. The cost gets affected since formularies and tiers determine the type of drugs available in your plan and how much you have to pay for your drugs.

What are Prescription Drug Rebates and How Do They Work?

Prescription drug rebates are the price concessions, discounts, or refund facilities provided by drug manufacturers to health plans or consumers to reduce the price of the drugs. Prescription drugs can be used by health plans or PBMs to lower their costs, increase their profits, or reduce the premiums or copayments for their members.

What are the Different Stages of Medicare Part D Coverage?

There are four stages of Medicare Part D coverage and they are as follows:

  1. Annual Deductible: In this initial stage you pay for your prescription drugs until your spending amount adds up to the amount of your deductible. So If you have $0 deductibles, you can automatically upgrade to Stage 2.
  2. Initial Coverage: In this stage, your plan pays a partial amount for your prescription drug coverage. The rest of the amount, known as copayment or coinsurance, is paid by you.
  3. Coverage gap: This stage is when you reach the donut hole. This means that the plan is temporarily limited in how much it can pay for your drugs. In this stage, you’ll pay 25% each for overed brand-name drugs and plan’s cost for covered generic drugs. This stage increases your out-of-pocket expenses to a significant level. 
  4. Catastrophic coverage:  This phase is when your out-of-pocket expenses cross a total of $7400. In this stage, you pay as low as 5% coinsurance or copayment for your covered prescription drugs while the rest is paid by the government for the rest of the year. 

How Do I Know if I Qualify for Extra Help with Medicare Part D?

If you earn less than $22000 per year as an individual and $30000 per year as a married couple, you may qualify for Extra Help with Medicare Part D. 

How Can I Save Money on Prescription Drugs?

You can save on prescription drugs by:

  1. Go through the prescription drug plans thoroughly. Compare the plans and their prices
  2. Ask for generic or lower-cost alternatives to your drugs by consulting your doctor or pharmacist
  3. Use preferred pharmacies or Mail-order services
  4. Apply for assistance programs or discounts such as such as Medicare Part D by Medicare 

How Can I Get Help Paying for Prescription Drugs if I Don’t Have Insurance?

If you don’t have healthcare insurance, you can:

  1. Apply for Medicaid or other state programs
  2. Look for patient assistance programs or discounts
  3. Ask for generic or lower-cost alternatives to your current drugs
  4. Use mail-order or online pharmacies