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 penalties involved.
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 the year.
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 dozens of 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 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 10 cents.
Medicare Part D FAQs
Why did my prescription drug cost go up in the middle of the year?
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.
What is a “donut hole”?
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 $4,660 on covered drugs (as of 2023). The amount may change each year.
Once you reach the donut hole, your prescription drug costs will increase drastically. As of 2023, you will pay no more than 25% of the plan’s cost for covered, brand-name drugs or generic drugs.
Can you get out of the “donut hole”?
Yes, when you have paid $7,400 in out-of-pocket drug costs since the start of the year. When you reach this figure (as of 2023), 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.
Can I plan for the “donut hole”?
Yes, when you choose your drug plan on Medicare.gov, you will see a 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.
My Part D drug costs went up! What do I do?
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.
How do I file an appeal with my Part D drug plan?
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.