The four phases of Medicare Part D are the annual deductible, initial coverage, coverage gap, and catastrophic coverage.
Annual Deductible
At the beginning of the year, you will be paying the full cost for your prescription drugs when you fill them at the pharmacy. Your plan coverage does not kick in until you have met the plan deductible. The maximum deductible for Medicare Part D plans in 2022 is $480. Once you have paid this deductible, you enter the initial coverage period.
Initial Coverage
Costs during initial coverage will be the ones you signed up for with the plan. Each Medicare Part D plan will have different costs per covered prescription drug, but you can expect to have the lowest costs for generic, preferred drugs and the highest costs for specialty drugs. The covered drugs are organized into tiers based on whether they are generic, brand-name, or specialty and preferred or not preferred. These tiers have different associated costs, and there are usually five tiers.
When you fill your prescription for a covered drug at the pharmacy, you will pay only the copayment you agreed to with your plan, and your plan covers the rest of the costs of the drug.
You enter the coverage gap once you have paid $4,430 toward prescription drugs.
Coverage Gap
In the coverage gap, your plan is limited on what it will cover for prescription drugs. You pay 25% of the costs for generic prescription drugs and 25% of the cost for brand-name drugs, plus 25% of the dispensing fee for brand-name drugs.
Your deductible, coinsurance, and copayments count toward exiting the coverage gap, as does the discount you get on brand-name drugs and the amount you pay in the coverage gap. Once you have paid $7,050 toward prescriptions, you exit the coverage gap and begin catastrophic coverage.
Catastrophic Coverage
You are out of the coverage gap and will pay a low copayment or coinsurance amount for the rest of the year. Your plan and the government will pay about 95% of the cost for your covered prescription drugs.
Extra Help
If you have a low income and limited resources, you can get help paying for prescription drug costs. When you have Extra Help, there is no coverage gap. You only pay $3.95 for each generic covered drug and $9.85 for each brand-name covered drug.
Looking for prescription drug coverage? Magellan Healthcare can help you find the right coverage that works for you. Contact us today to take charge of your prescription drug costs.
