Medicare Part D plans are optional Medicare plans that cover prescription drug costs. Around 46 million of the more than 60 million people who have Medicare are also enrolled in a Medicare Part D plan.
If you’re considering joining them, you may wonder what Medicare drug plan is best for you.
Before you enroll in a Medicare prescription drug plan, consider the following to choose the right Medicare drug plan for your needs.
Medicare Part D plans must meet minimum coverage standards set by Medicare. However, Medicare Part D plans don’t need to cover every medication that Medicare approves. That’s why it’s essential to compare Medicare Part D plans and choose one that covers your prescribed medications.
The drugs each plan covers are listed on its formulary. Any medications not listed are not covered. Formularies are organized in tiers, with drugs in each tier having a different out-of-pocket cost.
Tier 1 is typically for less expensive drugs, while tier 4 is for the most expensive:
Note that Medicare Part D plans don’t typically cover the following drugs, meaning you won’t find them on any formulary:
Medicare Part D plans often have a pharmacy network that can fill your prescriptions.
These networks may include:
Filling your prescriptions at preferred pharmacies can lower your out-of-pocket costs for medications and delay you from reaching the coverage gap. Check whether plans you’re interested in have preferred pharmacies convenient to you that can help you save money.
Note that the "donut hole" coverage gap is a period lasting from the time you exceed your standard annual medication allowance ($4,130 in 2021) to the start of a new yearly insurance period. At the beginning of this period, you’ll pay 25% of the total cost of your prescription medication. If your out-of-pocket spend reaches the catastrophic coverage level ($6,550 in 2021), you leave the coverage gap and only pay a small copay for your prescriptions.
Premiums are monthly expenses for maintaining a prescription drug plan. Deductibles are amounts you pay before the plan starts paying its share of your prescription drug costs. Both of these amounts must be factored in when comparing Medicare Part D plans.
Standalone prescription drug plans have monthly premiums, which vary between insurers. Your annual income can also impact how much you’ll pay above the standard monthly premium.
Prescription drug plans can have an annual deductible costing no more than $445 in 2021. Some plans may feature $0 deductibles. Once you’ve met your deductible, your Part D plan charges you a smaller copayment when you fill prescriptions. Most Part D plans don’t charge a deductible.
You can choose either a standalone Medicare Part D plan, which works alongside your existing Original Medicare (Part A and Part B) coverage, or you can enroll in a Medicare Part C plan (also called a Medicare Advantage plan) that includes Medicare Parts A, B, and D benefits.
Many people prefer bundling their coverage, as they only have one monthly premium to pay. Research the costs involved to decide whether a standalone or Medicare Advantage plan with prescription drug coverage suits you best.
The best prescription drug plan is one that meets your needs. It should cover the prescription medications you take and have a pharmacy network that includes pharmacies near you.
Once you’ve compiled a shortlist of plans that meet these criteria, narrow down your search by identifying plans with the following qualities:
Note that the best Part D plan in 2021 may not be the best plan for you in 2022. You can change your Part D plan during the Open Enrollment Period (also called the Annual Election Period, or AEP), which begins on October 15 and ends on December 7. Review your plan during this time each year to make sure it’s still your best choice.
Assessing several different Medicare Part D plans may seem daunting, but remember what you need out of your plan. Look for plans that best meet your medication needs and budget.
A licensed insurance agent can help you learn about Medicare Part D plans and Medicare Advantage plans with prescription drug coverage that may be available where you live.
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