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Part D Plan Costs — Premiums & the Donut Hole

If you have Part D coverage, you may have to pay premiums, "donut hole" drug costs, and other out-of-pocket costs like deductibles.

Your Part D plan premiums will depend on the type of plan you enroll in and the insurance company you choose. The average Part D plan premium was projected to be $43.48 in 2018, according a Kaiser Family Foundation (KFF) report.**

You also may have to pay out-of-pocket costs before using your Part D coverage. Some Medicare Part D plans came with a deductible of up to $405 in 2018, which you may have to meet before your plan covers anything, according to the KFF report. In addition to that, your plan may charge you coinsurance or a copayment for filling individual prescriptions.

The "donut hole" is another source of Part D plan costs. It is a coverage gap that you may fall into if you and your plan spend over a certain amount on your drugs during a calendar year. While in the donut hole, you may have to pay higher out-of-pocket costs for prescription drugs.

Income-related adjustment

If your yearly income is above a certain level, you must pay a monthly adjustment amount in addition to your plan premium. This is called a Part D income-related monthly adjustment amount (Part D-IRMAA).

You must pay the Part D-IRMAA directly to Medicare, not your Part D plan provider, according to Medicare.gov. Most people have the extra amount removed from their Social Security checks.***

Your monthly adjustment is based off your tax returns from 2 years ago (2017). The chart below from Medicare.gov shows the details for 2019:***

If you file an individual tax return If you file a joint tax return If you file a married & separate tax return Your 2019 monthly costs
$85,000 or less $170,000 or less $85,000 or less Your Part D plan premium
$85,000 - $107,000 $170,000 - $214,000 N/A $12.40 + your Part D plan premium
$107,001 - $133,500 $214,001 - $267,000 N/A $31.90 + your Part D plan premium
$133,501 - $160,000 $267,001 - $320,000 N/A $51.40 + your Part D plan premium
$160,001 - $499,999 $320,001 - $749,999 $85,000 - $414,999 $70.90 + your Part D plan premium
$500,000 or above $750,000 or above $415,000 or above $77.40 + your Part D plan premium

Late enrollment penalty

If you wait to enroll in a Part D plan, you may face a late enrollment penalty, according to Medicare.gov.**** This may apply if you miss your Initial Enrollment Period (IEP) and have a period of 63 days or more in a row when you do not have Part D coverage or another form of creditable prescription drug coverage.

Your late enrollment penalty amount depends on how long you went without creditable prescription drug coverage after you became eligible for Medicare.

Your Medicare Part D plan will notify you if you owe a penalty. If you do, you may have to pay this penalty for as long as you have Part D coverage.

Medicare.gov provides more information about how to calculate your late enrollment penalty.

Out-of-pocket costs

Part D plans have several out-of-pocket costs including yearly deductibles, copayments, and coinsurance, according to Medicare.gov.

Part D yearly deductibles are the amount you must pay before your plan starts covering its portion of prescription medication. Each Part D plan may have a different deductible, and some plans have no deductible.

Part D copayments and coinsurance are the amount you pay for each prescription drug after you have met your yearly deductible.

A copayment is a set amount for all prescription drugs in a specific formulary tier. For example, a Tier 1 prescription drug may have a $10 co-payment.

Coinsurance is a payment based on a percentage of the drug’s total cost. For example, if your co-insurance is 20%, a $25 drug would cost you $5.

The pharmacy you use may affect your Part D plan’s co-payments and co-insurance depending on whether it is an in-network pharmacy. Our Part D benefits page has more information about network pharmacies.

The "donut hole"

Most Part D plans have a temporary coverage gap, which is often called the "donut hole". A donut hole is a period where you have to pay higher out-of-pocket costs for your prescription drugs.

 

The percentage you have to pay while in the donut hole will gradually decrease every year until 2020 according to Medicare.gov.****

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*You must continue to pay your Medicare Part B premium.

$0 premium plans may not be available in all areas.

**Kaiser Family Foundation, "Medicare Part D: A First Look at Prescription Drug Plans in 2018." Published Oct. 13, 2017. https://www.kff.org/report-section/medicare-part-d-a-first-look-at-prescription-drug-plans-in-2018-findings/

***Medicare.gov, "Monthly premium for drug plans." Published 2018. https://www.medicare.gov/part-d/costs/premiums/drug-plan-premiums.html

****Medicare.gov, "Costs in the coverage gap." Published 2017. https://www.medicare.gov/part-d/costs/premiums/drug-plan-premiums.html

The purpose of this communication is the solicitation of insurance. Contact will be made by an insurance agent/producer or insurance company.

This information is not a complete description of benefits. Contact the plan for more information. Limitations, copayments and restrictions may apply. Benefits, premiums and/or member cost-share may change on January 1 of each year.

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Last Updated: 09/12/2017 Accepted

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