What is Medicare Part D and How Does It Work?

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Written by: Vanessa Jerusalimiec (*Amsive Digital)  |  Reviewed by: Shelley Wyant  |  *MHP partners with Amsive Digital on news content


What is Medicare Part D and How Does It Work?

 

Medicare Part D offers prescription drug coverage. It’s a good idea to enroll in Medicare Part D as soon as you’re eligible for Medicare so you won’t have any enrollment penalties or gaps in your coverage.

What is Medicare Part D?

Medicare Part D plans cover prescription drugs to lower the cost of medications. Private insurance companies offer Part D plans, so you have a lot of options when selecting a plan. Each provider sets their own costs and coverage, and you’ll need to research plans in your area to find a Part D plan that best suits your health care needs.

Am I Eligible for Medicare Part D?

If you’re enrolled in Medicare, you’re eligible for Medicare Part D. To join a Medicare Part D plan, all you need is your Medicare number and the date your Original Medicare coverage started.

You may consider joining a Medicare Part D plan if you have Original Medicare Parts A and B. Original Medicare covers basic hospital and medical costs, but it doesn’t cover your medications.

What Drugs Are Covered by Medicare Part D?

Each Medicare Part D plan is unique, and coverage varies between plans. Before you enroll, make sure you find out exactly what’s covered. You can research plans by checking the plan formulary. This is a list of every medication covered in the plan, as well as how much each medication will cost.

How Much Do Medicare Part D Plans Cost?

So how much is Medicare Part D? Your Medicare Part D costs depend on where you live, your income level, and the plan you select. Some plans have monthly premiums as low as $0. Remember that this premium is in addition to your Medicare Part B premium.

You can also lower your monthly medication costs by filling your prescriptions at an in-network pharmacy. This ensures that you’re paying the lowest price for your medications.

Medicare Part D Tiers

To help lower costs, Medicare Part D plans offer medications in several tiers. Each tier costs a different amount, and drugs on a lower tier cost less than drugs on a higher tier. Here’s how it works:

  • Tier 1 includes most generic prescription medications. This tier has the lowest copayment.
  • Tier 2 includes preferred brand-name prescription drugs. This tier has medium copayments.
  • Tier 3 includes non-preferred brand-name prescription medications. This tier has very high copayments.

Medicare Part D Deductibles

Just like Original Medicare, Part D plans may also have a yearly deductible. This is the amount you need to pay for your medications before Part D coverage starts. Each plan can set their own deductibles, so it varies between plans. However, the maximum deductible a drug plan can set for 2024 is $545.

Medicare Part D Copayments and Coinsurance

After you reach meet your yearly deductible, your Part D coverage kicks in. Copayments and coinsurance will apply. The copayment or coinsurance for each medication is listed in your plan formulary. Generic medications have low copayments and brand-name drugs usually have higher copayments.

What About Medicare Part D Late Penalties?

If you don’t enroll in Medicare Part D when you are first eligible, you may have to pay a late enrollment penalty. This penalty will be permanently added to your Part D premium. It’s important to enroll in a Medicare Part D plan as soon as you’re eligible for Medicare. You can also avoid late penalties by enrolling in a Medicare Advantage plan that includes drug coverage.

Find the Perfect Medicare Part D Plan

You can find the best Medicare Part D plan by reviewing your medications, taking a closer look at the plan formulary, and checking the plan deductibles and copayments. Choosing the plan with the lowest monthly premium may not always be the best option, so make sure you consider all these factors before enrolling in a Medicare Part D plan.

If you're a Michigan resident considering Medicare, McLaren Health Plan has you covered with a variety of Medicare plans offering extensive benefits. Learn more about how our plans are specifically designed to support your health journey in Michigan.

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