Original Medicare Parts A and B don’t include prescription drug coverage, except in certain circumstances. You will need a Part D plan for most of your prescription medication needs.
Medicare Part D plans are sold by private insurance carriers but regulated by Medicare. Most Medicare beneficiaries have at least 25 Medicare Part D plans to choose from in 2021. You’ll want to enroll in the Part D plan in your area that is most cost-effective for your specific medications.
Before you do that, you should know how Medicare Part D plans cover your prescription medications.
Medicare Part D coverage stages
All Medicare Part D plans have the same four coverage stages: deductible, initial coverage, coverage gap (donut hole), and catastrophic coverage. You will move through these stages as you use your Part D plan to fill covered medications. The coverage limits for each stage are set by Medicare each year. However, specific dollar limits may vary by plan in the deductible and initial coverage phases.
For example, in 2021, Part D plans can’t set their annual deductible any higher than $445 but they can choose to reduce it. You will pay the full cost for your covered drugs until you have met your deductible for the year. However, some plans may not apply the deductible to all drug tiers, so depending on the prescription medications you take, you may start in the second stage, initial coverage.
During initial coverage, you will pay a copay or coinsurance set by your plan’s carrier for covered drugs. Medicare sets coinsurance requirements for this stage that each Part D plan must follow. Copays and coinsurance vary by drug tier. Once you and your plan have reached the initial coverage limit for the year, you’ll move into the coverage gap. Note, many beneficiaries never reach the coverage gap.
Your plan is allowed to charge up to a 25% coinsurance in the coverage gap, but some plans may lower your coinsurance. However, if you’re prescribed a medication not covered by your Part D plan, you will be responsible for the full cost throughout all stages. If you and your plan reach the coverage gap limit, you’ll move into and remain in the catastrophic coverage stage for the rest of the year, where you’ll pay around 5% for your covered prescriptions.
Medicare Part B prescription medication coverage
As mentioned above, Medicare Part B may cover prescription medications in certain circumstances. Medicare Part B may cover a prescription medication administered to you by a medical professional if you meet the requirements for Part B coverage of that drug. For example, Prolia is a common injectable osteoporosis drug that many people get at the doctor’s office. Medicare Part B will cover this injection at 80%, but only if you meet the following requirements:
- You’re a woman
- You meet Medicare’s requirements for home health services
- You’ve had a bone fracture related to postmenopausal osteoporosis
- You’re certifiably unable to give yourself the injections and don’t have a family member or caregiver who can give them either
Medicare Part B also covers certain medications used with durable medical equipment. For example, if you use a Medicare-approved insulin pump, the inulin used with that pump is also covered under Part B at 80%. Medicare Part B may also cover specific medications administered to you while in the emergency room.
Medicare Part A prescription medication coverage
Medicare Part A covers your inpatient stay needs. As an inpatient, Medicare Part A may cover your room, meals, general nursing, and prescription medications needed to treat the reason you’re an inpatient. For example, if you were in the hospital due to a stroke, Medicare Part A may cover the medications administered to you related to your stroke.
Choosing your Part D plan
There are two ways to get Part D coverage. You can enroll in a standalone Part D plan with Original Medicare or choose a Medicare Advantage plan that includes a Part D plan. Either way, the Part D plan works the same. However, drug costs and the formulary will vary by plan.
Each year, you’ll want to compare Part D plans and enroll in the plan that is most cost-effective for your current prescription medications. You can do this during the Annual Election Period that occurs each fall. Doing this will ensure you are as well covered as you can be for your prescription medications.