Medicare prescription drug plans, simplified
Prescription drug coverage is an incredibly important part of our health plans. This is especially true for people over age 65 and on Medicare. However, trying to understand Medicare prescription drug coverage can be challenging.
To help you break through the confusion, Blue KC has put together this summary of how Medicare prescription drug plans work. But before we start talking about the prescription drug components, let’s start with reviewing the basics.
There are four parts of Medicare, each designated with a letter:
- Part A – Hospital coverage
- Part B – Medical coverage
- Part C – Medicare Advantage
- Part D – Prescription drug coverage only
How drug coverage fits into Medicare plans
Here’s where it might get a little confusing. The two parts of Medicare that cover prescription drugs are Part C and Part D.
- Part C, otherwise known as Medicare Advantage (MA), covers you for overall health care including prescription drugs. Think of MA as bundling Parts A, B and D together.
- Part D is for prescription drug coverage only. It’s a stand-alone plan for people on Original Medicare (Part A and B) or other insurance plans, but not for MA subscribers since their plan already has a drug coverage component.
Please note: Medicare Part D prescription plan and Part C (MA) with prescription drugs are two separate types of coverages; you cannot get both.
Which Medicare prescription drug coverage is right for you?
It depends. Basically, you have two choices; going with Original Medicare Parts A and B then purchasing Medicare Part D prescription plan separately; or go with a MA plan with prescription coverage already built in.
Let’s take a closer look at the two options:
Medicare Advantage Prescription Drug (MAPD) plans are a type of Medicare Advantage plan that includes prescription drug coverage. You typically get more coverage than with Original Medicare and you don’t need to worry about a separate Part D plan. Often there are additional extra benefits, such as dental and vision coverage, as well as lower costs – all making these plans very popular.
Medicare Part D, also known as Medicare’s prescription drug coverage, helps pay for medications not covered under parts A or B. This stand-alone prescription drug plan is optional and is also sold by private insurance companies. One reason why many choose this option is Part D can work with other insurances such as Medicare Supplement also known as Medigap, employer coverage, COBRA, Medicaid, and many others. The deductibles for Medicare Part D also vary by plan but can’t be higher than $545 in 2024.
What are copays, coinsurance, and deductibles?
As you compare plans and look for the right Medicare prescription drug coverage for your needs, you’ll see these words being used quite a bit: copay, coinsurance, and deductibles. What exactly do they mean?
- Copay is what you pay out-of-pocket for prescriptions – it may vary because drug plans and manufacturers can change what they charge at any time, it will also depend on the tier level of the specific drug
- Coinsurance is the percentage of costs you pay after you’ve met your deductible.
Deductible is what you must pay for prescriptions before Original Medicare, your Medicare Advantage Plan, your Medicare drug plan, or your other insurance begins to pay
What you need to know about the Medicare Donut Hole
Perhaps you’ve heard of a coverage gap called the “Donut Hole” when it comes to your prescription drugs?
It means this: You stay in the Initial Coverage Stage for prescription drugs until after you and your drug plan have spent a total of the $5,030 on covered drugs. $5,030 is the maximum for 2024. Many people don’t reach this limit. But if you do, you go into the Donut Hole.
Once there, you pay more for covered prescriptions. However, the Medicare Coverage Gap Discount Program provides manufacturer discounts on brand name drugs. You pay 25% of the negotiated price and a portion of the dispensing fee for brand name drugs. You also receive some coverage for generic drugs. You pay no more than 25% of the cost for generic drugs and the plan pays the rest. Only the amount you pay counts and moves you through the coverage gap.
Once you have spent $8,000 (2024), you reach the Catastrophic Coverage Stage. Here, the plan pays the full cost for your covered Part D drugs until the end of the calendar year. You pay nothing.
MAPD plans do not cover the Donut Hole in the same way as stand-alone Part D plans. Some plans may offer additional coverage for prescription drugs during the coverage gap. It is essential you review your specific plan details to see how prescription drug coverage is handled during the Donut Hole phase.
Blue KC Insight
“No matter what your needs are, it’s vital we help you understand the coverage gap. Everyone is unique. For those who take infusions, most costly prescriptions could fall under Medicare part B, typically coinsurance levels until they satisfy the plan’s out-of-pocket maximum. For someone with diabetes, there’s more to consider than just insulin. There are also prescriptions for meters and other supplies. Many MA plans will cover these at 100%. You need to know the specifics for your situation.”
Sheri Blankenship, Blue KC Medicare Advisor
Have questions about the coverage gap? Give us a call at 833-467-2134.
So what drugs are covered under Medicare plans?
Both MAPDs and Medicare Part D prescription plans have a list of covered drugs. A plan’s list of covered drugs is called a “formulary,” and each plan has its own formulary. It includes brand-name prescriptions and generic drug coverage.
The formulary typically divides its drugs into tiers based mostly on cost. There can be as few as three or as many as five or more, depending on the specific plan. For example, a tiered plan might be structured like this:
Tier 1: Generics with low copay
Tier 2: Common brand names and high-cost generics with medium copay
Tier 3: Uncommon brand name drugs with high copay
Tier 4: Unique, specialty drugs with high costs
Formularies for each plan can vary. Tiers can vary too. That’s why it’s so very important you carefully review drug coverage details and costs before you commit. Make sure you have a plan that best matches your specific healthcare and budget needs.
Please note: Some drugs may require prior authorization before dispensing. You will need to check on your specific plan to confirm coverage and determine if prior authorization is required.
Need more information?
Remember, Blue KC Medicare Advisors are always ready to help with questions about Medicare’s prescription drug coverage. Give us a call at 833-467-2134.
Blue Cross and Blue Shield of Kansas City is an independent licensee of the Blue Cross and Blue Shield Association.
