The Benefits of a Part D Drug Plan
Part D is the newest part of Medicare, having been rolled out to the public in May of 2006. For over 40 years before that, Medicare beneficiaries did not have any outpatient retail drug coverage. As you can imagine, this was a sore spot with seniors for many years, and so the new Part D program was a very welcome development.
Unlike Medicare Parts A and B which everyone needs once they retire and no longer have access to employer coverage, Part D is voluntary. It’s voluntary because some people may have other drug coverage through the Veteran’s Administration, or they may have Indian Tribal benefits that provide medications.
There are, of course, also people who take little to no medications and simply don’t want to enroll. These people do so at their own risk because there are penalties to enroll late. Also, you can only enroll in drug plans during certain times of the year and you never know when you may fall ill and be prescribed a new medication that you truly need.
When that happens, you don’t want to find yourself waiting months and months before you can enroll in a plan during the next election period. Let’s review some of the benefits you will get for enrolling in Part D.
Access to Medications for Every Health Condition
Medicare Part D drug plans have formularies of covered drugs. While plans do have some choices in which medications they include, all drug plans must include six classes of medications. These include immunosuppressants, antidepressants, antipsychotics, anticonvulsants, anti-cancer medications and HIV-AIDS drugs.
In addition, each plan must also include 2 medications in each therapeutic class. This is so that your doctor will have medications available that he or she can prescribe if you develop a new health condition mid-year.
Between these two stipulations, Medicare ensures that no matter which plan you buy, you’ll have access to a comprehensive list of drugs for whatever health circumstances may arise.
Reduced Prices for Medications
Part D drug plans usually group their medications into five tiers. These are preferred generic drugs, non-preferred generic drugs, preferred brand-name drugs, non-preferred brand-name drugs and specialty medications. Your plan will assign you a certain copay or coinsurance that you pay for each medication.
For example, preferred generics are cheapest and may have a copay of $5 on one plan and $10 on another plan. It varies by plan. Your copays will generally be higher with each successive tier, so preferred brand-name drugs are going to be more expensive than preferred generics. Only the most expensive drugs fall into the specialty category, and if you find yourself needing one of these drugs, you will generally pay a percentage between 25% to 33%.
The manufacturer discounts the drugs and your insurance company pays a share as well. You will see that between these two contributions, you are left to pay the smaller share of the cost.
Access to Certain Vaccines
A number of common vaccines also fall under Part D. For example, many Part D drug plans will pay for a portion of the shingles vaccines. Without Part D, you would likely pay full prices for these vaccines.
As an agent who has helped thousands of beneficiaries with their drug plans over the years, I can attest that the Catastrophic Coverage portion of drug plans is the most important reason to enroll in a drug plan. It’s great that you can get access to medications for a copay, but it’s even more important that every year there is a limit to what you might spend.
This helps to protect you from medical bankruptcy if you develop a chronic illness. Medicare tallies the total cost of the drugs that you use each year. If your total spending goes over a certain limit, then you reach the Catastrophic Coverage level.
In 2019, that level occurs when you reach $5100 in drug costs for the year. At that point, any additional medications must be covered 95% by the plan for the rest of the calendar year. This greatly reduces your drug expenses down to 5%.
Imagine that you are prescribed an oral chemotherapy medication with a retail monthly cost of $5000. In just one month you will almost reach the catastrophic coverage level. Now for the remaining months of the year, you will pay 5% or $250 per month for that medication instead of $5000. This benefit is enormous and serves to protect you well.
While Part D certainly isn’t perfect, it has some clauses built to truly benefit you. It’s a far cry better than what we had prior to 2006, which was nothing. So if you’ve been wondering whether you should sign up, I hope we’ve helped you to see the benefits of having a Part D drug plan. Even if you don’t take many medications, you might consider enrolling in one of the lowest cost plans in your state, which might cost only $15 - $20/month. This is a small price to pay to have coverage when you most need it.