Most Callenging Subject in Medicare. Let's Untangle it.

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Definitions

Plan:

Insurance company

Premium: 

The monthly payment to the plan for prescription drug coverage.  The plan premium is in addition to your part B premium (if applicable, and any other premiums for MA or medicare supplement insurance plans), which you must continue to pay. Fewer than 5% of medicare beneficiaries may be required to pay a part D Income Related Monthly Adjustment Amount (Part D IRMAA) to Medicare, not the plan, if they're modified adjusted gross income, as reported on their federal tax return from 2 years ago, is more than $85,000 (individual or married filing separately) and $170,000 (married filing jointly). 

Deductible:

The amount you must pay for prescription medications before MA-PD or PDP (insurance plans) begin to pay. Example: 2018, you may pay a deductible of $405 (this varies by plan) before the plan starts paying benefits. Note:  A deductible can apply to the entire plan and/or individual drug tiers.

Coinsurance:

The amount you may be required to pay as your share of the cost of prescription medications. Coinsurance is usually a percentage (ie: 25%).

Copayment:

The amount you may be required to pay as your share of the cost of prescription drug medications. Copays are usually stated as fixed amounts (ie: $2.00).


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HOW PART D WORKS:

Yearly Deductible: You pay all. Plan pays nothing.

You begin this stage when you fill your first prescription. If your plan or drug tier has a deductible, you pay the total cost of the drugs until you reach the deductible amount. (Some plans don't have a deductible).


Initial Coverage: You pay a part. Plan pays a part.

You and your insurance company start sharing the costs once you meet the deductible this year until the total shared amounts reach a certain amount ($3,750 in 2018). Your total out of pocket cost includes your annual deductible but not your premium payments.


Coverage Gap:  You pay most. Plan pays little.

You pay a percentage for brand name drugs or a larger percentage for generic drugs which cost less.  Once your total out of pocket costs (including yearly deductible and initial coverage) is reached, you move to catastrophic coverage. (2018: $5,000).


Catastrophic Coverage:  You pay little. Plan pays most.

You pay a small copay or coinsurance for drugs (the greater of generic and brand name drugs or a percentage of total drug costs).  Plan pays the rest of the drug costs until end of the year.

Next year it all begins again and things may be different. Be sure to have your Part D plans evaluated every year with your broker of choice.


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Part D Videos

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