What is Medicare Part D (Prescription Drug Coverage)

Learn all about what Medicare Part D is (prescription drug coverage), what it covers, and how much it might cost you. Our overview of Medicare Part D answers all your questions in a clear and concise way.
What is Medicare Part D (Prescription Drug Coverage)

Prescription drug coverage under Medicare is referred to as Part D. It aids in paying for prescription drugs that are not covered by sections A or B. This prescription coverage is sold by private insurance companies so plans can vary and be priced differently. Read more about: What is part D (Drug coverage)?## What Does Plan D Cover?All plans are required to cover the majority of prescription drugs that those enrolled in medicare use, including those in a number of "protected classes," such as those used to treat HIV/AIDS and cancer. Every plan has its own formulary, which is a list of the medications that are covered by the plan. Many plans categorize their formularies of medications into various "tiers" or levels. Each tier of drugs has a different price. For instance, you will often pay less for a medicine in a lower tier than one in a higher tier.Must cover all or most of the following categories of drugs:* HIV medications* Antidepressants* Cancer treatment medications* Immunosuppressants* Anticonvulsants* AntipsychoticsMost plans also cover the majority of vaccines with no copay. Plan B covers flu shots, pneumococcal, and COVID-19. Also, note that a private company can change the price of its coverage list at any time. This can be due to a generic version of a brand name drug becoming available, a brand may change the price if a generic becomes available or a new medication became available.## What Does Plan D Not Cover?* The following types of drugs are typically not covered by Part D plans:* Anorexia, weight loss or weight gain* Cough and colds symptomatic relief* Cosmetic purposes* Fertility drugs* Hair growth* Over-the-counter drugs* Sexual or erectile dysfunction* Vitamins and minerals, except for prenatal vitamins, niacin (when used to treat a condition), and fluoride## What Does Plan D Cost?The price will vary depending on the coverage, out-of-pocket expenses, and the plan you select. You might also have to pay copayments or coinsurance for specific medications in addition to your monthly premium and an annual deductible. Part D insurance can help reduce many of these costs, but you will probably still have to pay something for brand-name prescription drugs.### Part D PremiumVaries by the plan that you choose a plan. In 2022 the average national premium is $33.37. Each year, the costs associated with your Part D coverage (such as premiums, deductibles, and coinsurance or copayments) can change. Your plan must give you an Annual Notice of Change (ANOC) every fall to let you know of any upcoming changes. Your plan is not allowed to alter your deductible or premium during the plan year, however, the cost of your prescription prescriptions may fluctuate depending on the coverage period you are currently enrolled in.> Note: If you are considered high-income you may be required to pay a set amount in addition to your part D premium. Learn more about Medicare Income-Related Monthly Adjustment Amount (IRMAA)### Part D DeductibleThe amount you must pay out-of-pocket to receive your plan's full benefits is known as the Medicare Part D deductible.Between Medicare drug plans, deductibles differ. In 2022, no Medicare prescription medication plan may have a deductible higher than $480. Each Medicare Part D carrier can choose the deductible for their specific plans; however, not all Medicare Part D plans have deductibles. The maximum deductible you must pay drops if you are receiving Extra Help. Your deductible will be $99 if you only get some Extra Help. The deductible for those who are fully eligible for Extra Help is $0.Medicare Part D offers four different coverage tiers. The first step is to meet the plan's deductible.### 1. Deductible phaseDuring this phase, you will pay cost-sharing depending on the retail cost of your medicines up until your yearly deductible has been satisfied for the calendar year. Jan. 1 marks the start of a new calendar year and your deductible will be reset. For 2022, Medicare has set the Part D standard deductible at $480.### 2. Initial coverage phaseYou will pay a copay or coinsurance during the first year of coverage, and your plan will contribute to the cost of your eligible prescription medications. The amount will differ depending on your plan and the drug. ### 3. Coverage gap (or donut hole)The term "donut hole" has also been used to describe this stage. For the plan year 2022, you are liable for paying 25% of the retail price of your medications once the combined drug costs for which you and your plan have already paid a total $4,430. This is the initial coverage cap. #### What happens when you're in the “donut hole”?For the year 2022, the coverage gap (donut hole) starts when, you and your plan have paid a total of $4,430, which also includes your deductible.Currently, when you are in the Medicare donut hole, you will pay a portion of your drug expenses (25% in 2022). You won't leave the doughnut hole until you've paid $7,050 for all of your prescription medications (year 2022). This is known as the Total out of pocket max or also known as (TrOOP)> Note: If your plan includes coverage for the gap, you may get a discount once the plan's coverage has been deducted from the cost of the medication.### 4. Catastrophic coverageYou will leave the coverage gap and enter the catastrophic coverage phase once you have spent $7,050 out of pocket in 2022. This amount, which is called the TrOOP, changes annually. At this point, you will only be responsible for 5% of your drug's retail cost or $3.95 for generic drugs and $9.85 for brand-name drugs—whichever is greater.#### What is TrOOP?The abbreviation TrOOP stands for true out-of-pocket costs. It refers to the highest amount you may spend under Medicare Part D before leaving the coverage gap (donut hole) and beginning the period of catastrophic medication coverage. This limit on out-of-pocket expenses is established by Medicare and is set at $7,050 in 2022.#### What Counts Towards Your TrOOP?* Your plan's deductible. For 2022, Medicare has set the Part D standard deductible at $480.* Copayments and coinsurance for your prescription drugs. These sums may differ according on your plan, the tier your medications are in, and the drugstore you choose. The coinsurance and copayment costs are the lowest for lower-tiered and generic medications from the pharmacy designated by your plan.* Discounts like manufacturing coupons go towards it.* How much you spend out of pocket for prescription medications on your plan's formulary. While in the coverage gap, you can only pay a maximum of 25% for each prescription.* The discount the manufacturer offers you (70% discount) on name-brand medications when you are in a coverage gap. #### What does NOT count towards your TrOOP?* Prescription medication expenses that your plan does not cover.* Your monthly Medicare prescription medication plan's premium.* Pharmacy dispensing fee.| Deductible | Initial Coverage | Coverage Gap (Donut Hole) | Catastrophic Coverage | Amount Resets || --- | --- | --- | --- | --- || Some plans have a deductible, others do not.Max deductible is $480 | You pay the plans copays and coinsurance.Ends once you and the insurance company have spent $4,430 | You pay 25% of drugs | Begins when your spending, plus manufacture discounts reach $7050.You pay 5% of drug cost or $3.95 for generics and $9.85 for brand names - whichever is greater. | On Janurary 1st your plan resets. |