Medicare has specific plans that cover prescription medication. There are different options to consider, while out-of-pocket costs may vary.
Medicare-approved private insurance companies administer all Part D plans.
Some Medicare Advantage plans include coverage for prescription drugs automatically, while others require a person to choose it.
This article describes how Medicare covers prescription medications and what out-of-pocket expenses an individual can expect.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare covers prescribed drugs in the following ways:
- Part A covers drugs that healthcare professionals administer during a stay in the hospital
- Part B covers limited prescribed take-home drugs
- Part D covers most outpatient prescription medication
Private insurers administer Part D. It can be a standalone plan or a part of a Medicare Advantage policy.
However, Part D does not cover all medications that a person may want or need. In some cases, an individual’s plan may cover an alternative medication. In most cases, Medicare coverage excludes:
- medications for weight management, whether for weight loss or gain
- over-the-counter medicines
- fertility medications
- medicines for cosmetic purposes
- medications to treat erectile dysfunction
There are different ways to get prescription drug coverage.
A person can purchase Part D plans individually, providing they already have Original Medicare, or parts A and B. Someone can also use prescription drug coverage, if they select it, alongside:
- select Private Fee-for-Service plans
- some Medical Savings Account plans
- Medicare Cost plans
Alternatively, a person can get Part D as part of a Medicare Advantage (Part C) policy. Medicare Advantage typically bundles A, B, and D together in one plan. It is important to note that an individual must have Medicare parts A and B to be eligible for Medicare Advantage.
Some types of Medicare Advantage plans may not offer Part D coverage, so a person should compare plans before enrollment. In those cases, an individual may be able to add Part D coverage.
However, in this case, someone may be disenrolled from Medicare Advantage and returned to original Medicare coverage. Examples of plans that this policy could affect include:
- Health Maintenance Organization (HMO) plans
- HMO Point-of-Service plans
- Preferred Provider Organization plans
A person who wishes to do this without losing their Medicare Advantage coverage can only do so in:
- private fee-for-service plans
- Medical Savings Account plans
- cost plans
- some employer-sponsored Medicare health plans
In some cases, a person may wish to compare the costs of Part D coverage with private insurance they may have through work or other agencies. Once an individual has decided on a plan suitable for their needs, there are several ways to enroll, including:
- registering online, either through the Medicare Plan Finder or the insurance provider’s website
- completing and mailing a paper enrollment form
- calling the insurance provider directly
- calling Medicare at 800-633-4227
It may be beneficial for a person to have their Medicare card on hand, as the insurance company may need information from it, such as a membership number and the date the policy began.
An individual should register for Part D when they first enroll with Medicare. Otherwise, there may be a gap in coverage and a late enrollment penalty.
Medicare calculates a late enrollment penalty by taking 1% of the national base beneficiary premium — which for 2021 is $33.06 — and multiplying it by the number of months not enrolled.
As long as the Part D policy is active, the monthly premium will include the calculated penalty.
A person can compare Part D plans using the Medicare Plan Finder.
Medicare offers Extra Help to those with limited resources.
The Extra Help program can help individuals with the costs associated with Part D, including coinsurance, copayments, annual deductibles, and monthly premiums.
Medicare requires that each Part D plan provides a standard level of coverage.
Different insurers provide lists of covered medications that a person can view — many refer to each list as a formulary.
Insurance companies have different formularies, and each can decide which medications it covers, the tiers a medication falls under, and the categories that a medication belongs.
Part D plans include both brand name and generic prescription medications, and a formulary must consist of at least two common prescription medications from each category. The insurer can decide which two medications to offer.
If the formulary does not include a particular prescription medication, a similar medicine may be available. A person may wish to discuss options with their prescribing doctor.
If a physician prescribes a medication that is not on the formulary or believes that the available medicines may not be suitable, an individual can:
- request an exception
- pay for the drug out of pocket
- file an appeal with the plan provider or insurer
Drug plans may change their formulary at any time, as long as they follow Medicare guidelines.
A drug plan’s formulary may change because of:
- a change in drug therapy
- the release of a new drug
- new medical information becoming available
Sometimes, a person is notified of a change after it has already happened, but notice is generally in writing and provided a minimum of 30 days before a change occurs.
If the change has already happened, the insurer must either provide written notice when an individual requests a refill of their prescription, or the plan must offer at least a month’s supply of the drug based on rules in place before the change.
Part D plans may immediately remove drugs from their formulary if the Food and Drug Administration (FDA) declares the drug unsafe or if the manufacturer removes them from the market.
Medicare Part A offers limited coverage for prescribed medication while in a hospital setting, while Medicare Part D offers a more comprehensive level of coverage.
Private insurance companies administer Part D plans, which cover most medication that doctors prescribe on an outpatient basis. Part D can be either a standalone policy or included within Medicare Advantage plans.
A person may wish to compare the formularies of different insurers and decide which has the most appropriate medications to fit their needs.
For those who need financial support, Medicare Extra Help programs may assist in covering some of the costs.