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Medicare Part D is a government program for prescription drugs administered by private insurance companies. The Medicare Part D program started in 2006. Before that time, Medicare recipients paid thousands of dollars a year for drugs.
You pay a monthly premium for your Part D coverage and use the insurance company’s network of pharmacies. You don’t pay full price, but you will have a copay and the insurance company will pay the rest. You’ll receive a Part D insurance card which is different from your Medigap plan.
Like all private insurance plans, Part D follows federal guidelines. Each insurance provider submits its plan to Medicare annually for approval.
Coverage by Medicare Part D is administered in four stages, each with its own parameters.
Medicare tracks your spending under Part D. This is referred to as your “True Out of Pocket Costs” (TrOOP) each year. This protects you from being charged twice for certain medical costs.
For example, if you satisfy your deductible, but later switch to a different Medicare Part D plan because you move out of state, you won’t have to pay another deductible. Tracking works the same way for the gap and catastrophic coverage.
Part D plans change from year-to-year. You may see changes to your plan’s benefits, formulary, pharmacy network, premiums, copays, or coinsurance on January 1st of each year. You will have an annual election period each year to change your plan if you choose.
Medicare allows Part D providers to put rules in place for safety and to keep costs down. The three most common rules are listed below.
Check your plan’s formulary to see if restrictions apply to your medication. There are some medications not covered by Part D, such as non-formulary medications or compound medication. You have to file an exception for approval, but don’t assume all exceptions will be approved. You may have to pay for the prescription out-of-pocket.
It’s important to understand changing from one drug plan to another won’t eliminate restrictions. Restrictions are a normal part of all Part D drug plans, especially with pain medication, narcotics, and opiates.
Part D helps you reduce the hundreds or thousands of dollars you might pay in medication costs, now and in the future. With plans available for as little as $20 per month, it makes sense to take advantage of this valuable coverage.