Medicare has specific plans that cover prescription medication. There are different options to consider, and out-of-pocket costs may vary.
Medicare Part D plans are also known as prescription drug plans (PDPs). They cover take-home prescription medication, and usually, the most commonly prescribed outpatient drugs are available.
Some Medicare Advantage plans include coverage for prescription drugs automatically, while others require a person to choose it.
Private insurance companies that have been approved by Medicare administer all Part D plans.
Read on to learn how Medicare covers prescription medications and what out-of-pocket expenses to 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 administered during a stay in a hospital
- Part B covers limited prescribed take-home drugs
- Part D covers most outpatient prescription medication
Some of the drugs that are excluded from Medicare coverage include:
- drugs used for weight management (loss or gain)
- over-the-counter (OTC) medicines
- fertility drugs
- prescription medicines used for cosmetic purposes
- prescribed drugs 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. Prescription drug coverage, if selected, is used alongside:
- original Medicare
- select Private Fee-for-Service (PFFS) plans
- some Medical Savings Account (MSA) plans
- Medicare Cost plans
Alternatively, Part D can be added to a Medicare Advantage (Part C) policy, in which a person can receive Medicare parts A, B, and D together as a ‘bundled’ plan. It is important to note that an individual must have Medicare parts A and B to be eligible for Medicare Advantage.
A person can compare Part D plans using the Medicare Plan Finder.
Once a person has chosen 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 an individual to have their Medicare card on hand, as the insurance company may need information from it, such as a membership number and date the policy began.
A person 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.
An individual may have coverage for prescription drugs already, through, for example:
- an employer or union
- a Medicare supplement insurance (Medigap) policy that was purchased before 2006
- the Veterans Health Administration (VA)
- through the Indian Health Service
Before choosing a new Part D policy, a person may benefit from comparing their current plan details with different Part D options. Discussing current benefits with a plan administrator, insurer, or provider may also be helpful.
Each Part D plan is required to provide a standard level of coverage established by Medicare.
A person can view lists of prescription drugs that are covered by different insurers. These lists are known as a formulary.
Insurance companies have different formularies, and they can decide which drugs are covered, the tiers that a drug falls under, and how drugs are categorized.
Part D plans include both brand name and generic prescription drugs, and a formulary must include at least two commonly prescribed medications from each category. The insurer can decide which two drugs to offer.
If the formulary doesn’t include a particular prescribed drug, a similar medicine may be available. A person may like to discuss options with their prescribing doctor.
If a physician prescribes a drug that is not on the formulary or believes that the available medicines may not be suitable, a person can:
- request an exception
- pay for the drug out of pocket
- file an appeal with the plan provider or insurer
Changes to formularies
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 provide written notice when a person requests a refill of their prescription. The plan must also offer at least a month’s supply of a 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 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.
Signing up for Extra Help involves completing a form and providing proof of Medicaid eligibility. Enrollment can also be automatic, depending on a person’s circumstances.
Medicare Part B offers limited coverage for prescribed medication, but a more comprehensive level of coverage is available in Medicare Part D.
Private insurance companies administer Part D plans which cover most medication prescribed on an outpatient basis. Part D can be either a standalone policy or included within Medicare Advantage.
When choosing prescribed drug coverage, a person may like to compare the formularies of different insurers and decide which has the most appropriate drugs for their needs.
Should a person need additional support, this may be available through Medicare Extra Help programs.