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What is Medicare Part D?

Senior man using Medicare Part D to get his prescription medicine at the pharmacy

Original Medicare (Part A and Part B) only covers prescription drugs you receive during a hospital stay or if you have outpatient surgery. Private insurers such as Anthem offer standalone Medicare Part D prescription drug plans so you can make sure all your medications are covered.

What does Medicare Part D cover?

Part D is an optional insurance plan you can add to your Part A and Part B Medicare coverage. Medicare Part D covers prescription drugs, which can help you save money. This is especially true if you’re managing a condition that requires regular medication.

Is there a Medicare Part D donut hole coverage gap?

Most drug plans currently have a coverage gap, also called a “donut hole.” It sets a temporary limit on what your plan will pay for medications. Check to see if your medications will still be covered during the coverage gap or if your Part D plan has added benefits in the gap. The Medicare Part D 2021 limit is $4,130. While in the coverage gap, you are responsible for a percentage of the cost of your drugs.

What does Medicare Part D cost?

Most Part D plans have deductibles, premiums, and/or copays or coinsurance for which you are responsible. Each year, the government sets a maximum limit on annual deductibles.

That limit is a good benchmark for comparing plan deductibles. Keep in mind that a plan with a $0 deductible may mean you'll pay higher copays and/or monthly premiums. Learn more about Medicare Part D costs.

What is the best Medicare Part D plan?

Part D prescription drug plans cover different medications. The best Medicare Part D plan for you covers the medicines you need and take regularly.

Most plans have a formulary, which is a list of drugs the plan covers. While there are many drugs Medicare requires Part D plans to cover, you still want a plan that fits your personal prescription needs.

Just remember, there are laws that do not allow Medicare Part D insurers to cover certain categories of drugs. These include:

  • Non-prescription medications
  • Medications for anorexia, weight loss, or weight gain
  • Drugs used to promote fertility
  • Drugs for cosmetic purposes or to promote hair growth
  • Cough or cold medications
  • Prescription vitamins and minerals
  • Drugs for sexual or erectile dysfunction

Are generic prescription drugs covered by Medicare Part D?

You can save money if you take generic instead of brand-name drugs. Look for Part D plans that have tiers comparing generic and brand-name drugs. Tier one and Tier two usually cover generic versions of medications that may cost you nothing or very little compared to brand medications.

What plan is best when you don’t have prescriptions right now, but want that coverage for peace of mind?

If you do not currently have prescriptions for any medical needs, but still want a coverage safety net, look for a plan with a low monthly premium and/or deductible. That way, you have the coverage if and when you need it.

Medicare Part D vs. Medicare Advantage plans

Another way to get prescription drug coverage is through a Medicare Advantage plan (Part C) when combined with Part D (also called a Medicare Advantage prescription drug plan). Along with covering prescription drugs, many Medicare Advantage plans offer extra benefits like dental, vision, and hearing coverage that help you save more money in the long run.

Much like Part D plans, you can get Medicare Advantage plans through private insurers like Anthem. This gives you more plan options so you can find the plan that best fits your needs.

When are you eligible for Medicare Part D?

The first enrollment period for Part D is the Initial Enrollment Period (IEP). That’s the seven-month window that includes:

  • Three months before you turn 65
  • The month you turn 65
  • Three months after you turn 65

During this time, you can apply for Part D coverage along with Medicare Part A and Part B. Even if you are not taking prescription medications, it’s best to enroll in Part D as soon as you’re eligible to avoid penalties. You can still add Part D coverage after your IEP. You can make changes to your plan, including adding coverage, during the Annual Enrollment Period from October 15 to December 7 each year.

Avoiding the Medicare Part D penalty

If you don’t sign up for a Part D plan when you’re first eligible, or you’ve gone 63 days or more without creditable drug coverage after your IEP, you’ll pay a monthly late enrollment Medicare Part D penalty while you have Part D coverage. While the fee is typically only a few dollars each month, it can add up over time.

Applying for Medicare with Part D in mind

When applying for Medicare, consider whether or not you need prescription drug coverage. If you decide to add a Medicare Part D plan, ask questions and review your selected plan to make sure the medicines you use are included and affordable for you.

Explore all your options for Medicare prescription drug plans, including comprehensive Medicare plans.

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