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Medicare Part D: What You Need to Know

Anthony Knutson, PharmD, BCPS Anthony Knutson, PharmD, BCPS October 20, 2022 0 Comments General Health

Open enrollment for Medicare Part D and Medicare Advantage plans is active now and goes through December 7, 2022! Patients 65 years and older eligible for Medicare benefits should take advantage of this time to ensure they select the appropriate insurance plan for the upcoming 2023 year. The first step in this process is to become familiar with medicare.gov. This site allows patients to login to an account which contains previous years insurance and personal information to find and compare plans for the upcoming year. Whether you are Medicare eligible yourself, or know someone who is, hopefully the information below will help make selecting a plan this year a little bit easier.

What is Medicare Part D?

Most patients aged 65 years and older are eligible to enroll in Medicare. There are four different types of Medicare insurance plans patients can participate in.  Medicare Part A covers hospital stays, Medicare Part B covers medical care such as doctors’ visits and other clinical services, and Medicare Part D covers prescription drugs. Medicare Part C, also known as Medicare Advantage plans, combine Parts A, B, and D into a single plan. Medicare Part C plans will often have restrictions on the specific hospitals, clinics and doctors that are in-network for their patients.

Why is selecting a Medicare Part D plan important?

In general, Medicare Part D covers the potentially high cost of medications and protects patients from the financial hardship medications may cause, yet choosing the correct plan is very specific to each patient. All plans are required by law to cover certain types of common medications, however, specific medications within those drug categories are up to each specific plan. These specific medications are included in each plan’s formulary (list of the specific drugs covered by the plan). Thus, finding the right plan can mean the difference between high costs throughout the year versus more consistent and affordable coverage. Therefore it’s very important to enter the specific medications a patient is on when exploring plan options as it will help identify the plans that cover those specific medications.

It’s also important to select or at least review your plan each year because the plans change every year! From the specific medications they cover to the premiums and deductibles they charge; each plan can have large changes year over year.

Even if a patient doesn’t take prescription drugs now, it may still be worth getting a low-cost and low-premium plan for a couple reasons. This will ensure some coverage if a medication is needed midway through the year. Also, a late enrollment penalty is assessed if at any time after the initial enrollment period is over, there's a period of 63 or more days in a row when the patient doesn’t have Medicare drug coverage or other creditable prescription drug coverage (insurance through an employer or union for example). This penalty varies in cost depending on how many months the patient went without the coverage and is a permanent charge added to monthly premiums if a Part D plan is eventually added.

What to look for in selecting a plan

Selecting a plan is not as simple as choosing the one with the lowest monthly premium (amount paid each month) or the lowest total yearly cost. Of course, monthly premium and total overall yearly cost is going to be important, but patients must also account for any deductible (amount required to be paid before insurance coverage will pay for anything). The deductible is usually paid in January for any prescription fills during this time, so patients with high deductible plans need a financial plan for this. Another consideration in plan selection is when the coverage gap (often called the donut hole) will be entered and exited. During this time some patients should expect to have higher overall monthly costs for their medications.

An important change starting January 1, 2023, is if a patient takes insulin, plans can’t charge more than $35 for a one-month supply of each covered insulin under Medicare Part D. Under this change, plans also cannot charge a deductible for insulin. It will be important when selecting a plan to ensure the specific insulin the patient is taking is covered by the plan.

Checklist of important items to consider when choosing a Medicare Part D plan:

  1. Go to go to medicare.gov and view information for 2023 plans and enter specific location (zip code/county)
  2. Select “YES, I want to see my drug costs when comparing plans” and enter specific medications the patient is currently taking
  3. Enter preferred pharmacy (may compare up to 5 different pharmacies)
  4. Once plans are populated, be sure to click on plan details for each plan. This will help with #5 below
  5. Compare costs:
    • Monthly Premium and overall yearly cost
    • Yearly Deductible (this will need to be paid before insurance pays for anything, usually the first prescription fill of the new year)
    • Overall monthly costs (these will fluctuate throughout the year and should expect they may go up while in the coverage gap)
    • Month entering the coverage gap (often called the donut hole)
    • Month out of the coverage gap (sometimes patients go in and don’t get out.

Questions? Call 1-800-633-4227 (Medicare) or go to medicare.gov for more answers. Consider using the free and personalized health insurance counseling offered through State Health Insurance Assistance Program (SHIP).

Financial planning early in the process can help patients avoid surprises and hardships in the middle of the plan year and ensure access to the medications needed year-round.