Medicare Part D | Prescription Drug Plans (PDP)
Medicare Part D is prescription drug coverage, which Parts A and B don’t cover. Part D is available to everyone
that has Medicare. Medicare Part D is optional, but if you decide not to get it, there are late enrollment
Prescription drug plans cover most prescriptions, but each drug plan has its own list of covered drugs. In
addition, most drug plans place drugs into “tiers,” and each tier has a different cost. The lowest tier
is the least expensive while the highest tier is the most expensive.
To choose a drug plan, go to Medicare.gov, and click “Find health & drug plans.” If you get stuck, download
our cheat sheet, which has screenshots and explanations of each step along the way.
When choosing a drug plan, you ideally want to search for a balance of the cheapest carrier vs. the carrier
with the highest ranking. Carriers with low ratings are often culprits of raising their drug prices throughout
Medicare Part D Costs
Part D drug costs vary wildly depending on the following factors:
- Which drugs you take
- The plan you choose
- Which pharmacy you go to
In essence, the more drugs you take, the more expensive your premium will be. There are 27 different insurance
carriers to choose from, and they all have different prices. You can easily compare what your individual
plan would cost by doing a comparison on Medicare.gov.
Please know that a lower monthly premium does not mean a cheaper drug plan. Medicare.gov’s comparisons will
show you the total cost for the year, which is what you want to compare. Often times, a drug plan will
have a higher premium, but a lower yearly cost.
The other major cost factor is the late enrollment penalty. The window where you may sign up for a drug plan
is during your Initial Enrollment Period (the 7-month window around your 65th birthday).
If you choose not to sign up for a Part D drug plan – perhaps you don’t take any prescriptions – the penalty
is 1% of the national base beneficiary premium ($33.19 as of 2019) multiplied by the number of months you
didn’t have Part D drug coverage (or any other credible coverage). You then round up or down to the nearest
For example, your Initial Enrollment period ended in on May 31 of 2015. You didn’t join Part D until December
7, 2017, which means your drug plan will be effective January 1, 2018. Since you didn’t have drug coverage
from June 2015 through December 2017, your penalty is 31% of $33.19.
In sum, you would pay $10.30 in addition to your regular monthly premium.
Medicare Part D FAQs
Q Why did my prescription drug cost go up in the middle of the year?
A Drug plans can make changes to their drug tiers during the year, which means
your costs can unexpectedly change. Every insurance carrier must provide you with written notice at least
60 days before the change goes into effect. If you request a refill of your drug, the carrier must also
provide written notice of the change along with a 60-day supply of the drug under the current plan rules
before it changes.
Q What is a “donut hole”?
A The “donut hole” is another word for a coverage gap. This is a temporary limit
on what your drug plan will cover. Not everyone will enter the donut hole, but if you do, it’s because
your plan has spent over $3,820 on covered drugs (as of 2019). The amount may change each year.
Once you reach the donut hole, your prescription drug costs will increase drastically. As of 2019, you will
pay no more than 25% of the plan’s cost for covered, brand-name drugs and no more than 37% for generic
drugs. These percentages will start to decrease until 2020, when you will typically pay no more than 25%
of the cost of your drug at any point of the year.
Example: You have reached the donut hole in your Medicare drug plan. You go to the pharmacy to fill a prescription
for a covered, brand-name drug. The price for that drug is $500, and there’s a $2 dispensing fee that gets
added to the cost. You will pay 25% of the plan’s cost for the drug and the dispensing fee, which means
you would be responsible for $125.50 at the counter.
$502 x .35 = $125.50
Q Can you get out of the “donut hole”?
A Yes, when you have paid $5,100 in out-of-pocket drug costs since the start
of the year. When you reach this figure (as of 2019), you reach what is called catastrophic coverage. At
this time, you will pay a small coinsurance amount or copay for covered drugs for the rest of the year.
Q Can I plan for the “donut hole”?
A Yes, when you choose your drug plan on Medicare.gov, you will see chart showing
you if and when you will reach the donut hole. This allows you to prepare for that time. The only exception
is if your drug plan moves your prescriptions to a different tier, thus raising the cost unexpectedly.
In that case, you could wait to switch drug plans during the next annual open enrollment period, or you
could file an appeal.
Q My Part D drug costs went up! What do I do?
A Ideally, your agent will walk you through this and make it easy.
The plan of attack is:
- Talk to the doctor or health care provider who writes your prescriptions. Ask if there are generic, over-the-counter,
or less expensive drugs that could replace your current prescription.
- Get a written explanation from your Medicare drug plan. This is called a “coverage determination,” and
it includes information about whether a certain is covered, whether you have met requirements to get
a requested drug, how much you pay for a drug, and whether to make an exception to a plan rule when
you request it.
- Ask for an exception if you or your prescriber believes you need a drug that isn’t covered by your plan,
believes that a coverage rule should be waived, or believes you should pay less for a higher tier drug
because you can’t take any of the lower tier drugs for the same condition.
If you’re doing this on your own (without an agent), which we never recommend, make sure you ask your pharmacist
for a notice that explains how to contact your Medicare drug plan.
You can make your requests by phone or in writing if you haven’t bought the drug in question. If you have,
you must send your request in writing. You can also send a completed “Model Coverage Determination Request” form.
It takes 72 hours for your drug plan to notify you of your solution. If you disagree with this decision, you
can file an appeal.
Q How do I file an appeal with my Part D drug plan?
A You have the right to appeal. The first step is to request a redetermination,
which has to happen within 60 days of your coverage determination.
You should send in a written request including the following:
- Medicare #
- The name of the drug in question
- Reasons you’re appealing
- Name of the representative you’ve appointed (if applicable)
- Proof of the representative you’ve appointed (if applicable)
- Any medical records that support your case
It can take up to 7 days to hear back. If you disagree with this decision, you can move on to another request
for reconsideration. This is done by an Independent Review Entity. From here, you can take legal action
if you still disagree with the decision.
Throughout this process of appealing, we highly (highly!) recommend you speak with your agent to help you through
the process. Our team has helped individuals file appeals (and win) in the past, and while it’s not a guarantee
that you’ll win, you’ll have the guidance and support of an expert to give you the best chance.