Understanding Medicare Part D

You may have heard of the different parts of Medicare: Part A, Part B, Part C and Part D. But what are the differences between them? Do you really need to enroll in multiple Medicare plans? How do you know which plan offers which type of coverage?

If you would like to know more about Medicare Part D and prescription drug coverage, keep reading or go to to learn more. We’ll talk about what Part D plans provide, what late enrollment penalties are, understanding the different phases of a Part D plan, how Medicare Part D is different from Part C or Medicare Advantage plans and how you qualify for a Medicare plan.

What Is Medicare Part D?

Original Medicare is medical and hospital coverage that’s provided by the federal government. Original Medicare typically includes Part A, which includes in-patient hospital care, and Part B, which covers out-patient and doctor visits. But, Original Medicare doesn’t cover prescription drugs. To add prescription drug coverage to an Original Medicare plan, you need to purchase a Medicare Part D plan.

While Part D plans are optional, anyone who qualifies for Medicare and has a Part A or Part B plan qualifies for a Part D plan. Most Part D plans will have a separate monthly premium from Part A & Part B premiums. And, you should consider getting drug coverage even if you don’t think you’ll need it. Even if you don’t take any prescription drugs at the time that you enroll in Medicare, you might still consider signing up for a Part D plan to avoid getting a late enrollment penalty later on.

Late Enrollment Penalties

A late enrollment penalty is an additional fee that is added to a Part D premium every month. A person may be charged a late enrollment penalty if they don’t sign up for a Part D plan when they first enroll in Medicare and go for a period of 63 or more days without prescription drug coverage. A late enrollment penalty can be avoided if you don’t have a Part D plan but you do have other prescription coverage. Other coverage may include a Medicare Advantage plan or other credible drug coverage from an employer or a union.

Considering how late enrollment penalties can add to your monthly costs if you do sign up for a Medicare D plan in the future, it may be worth purchasing a Part D plan when you qualify for Medicare, even if you don’t need prescription drugs at that time.

The 4 Cost Phases Of A Part D Plan

Besides the monthly premium, you will also be responsible for the costs of any medications you fill using your Part D drug plan. How much those medications cost depends on which phase of your Part D plan you’re in when you fill a prescription.

Deductible: In the deductible phase, you will be responsible for the full costs of any medications you fill until the deductible is met.

Copay: Once your deductible is met, you will pay a copay for medications. The cost of the copay depends on the medication. Typically, generic medications will have lower copays. And, brand-name medications will have higher copays.

Gap: Once both you and the plan have paid a certain amount of money toward covered medications, you will enter the coverage gap. This is also known as “the donut hole.” The gap is a temporary limit on what the plan will cover for medications. When you’re in the gap, you will be responsible for 25% of the total cost of all medications.

Catastrophic: After you’ve paid a certain amount out-of-pocket on prescription drugs, you’ll be out of the gap and enter the catastrophic phase. In the catastrophic phase, you will only have a small cost for your medications: 5% of the total cost of a medication, or $3.70 for generics and $9.20 for brand-name medications, whichever is greater.

The Difference Between Part D and Part C

Medicare Part C, also known as Medicare Advantage plans, are plans that are offered by Medicare-approved private companies, as opposed to the federal government like Original Medicare. Medicare Advantage plans include both Part A and B coverage and often include Part D coverage for prescription drugs, as well. These “bundled” plans also may include other types of coverage, including vision, dental and even gym memberships.

Medicare Advantage must provide at least the same or better benefits as Original Medicare, but they may also have more rules, costs, and restrictions. Often, because they include additional coverage such as prescription coverage, the monthly premium will be higher, for example. Your provider network may also be more limited with a Medicare Advantage plan.

Enrolling in Medicare Part D

Anyone aged 65 or older qualifies for Medicare. You may also qualify for Medicare if you have a disability. To qualify for a Part D plan, you must have a Part A and/or a Part B plan first.

You can join a Medicare plan when you first qualify (when you turn 65 or are granted disability status) or during open enrollment. Open enrollment for Original Medicare is from October 15 – December 7 each year, or January 1 – March 31 for Medicare Advantage plans.

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