How Part D Works - Medicare
How Part D Works
Medicare Part D coverage helps pay for your prescription drugs
Coverage is not automatic. You must be enrolled in a private Medicare Part D plan to get benefits. You can purchase a stand-alone plan that covers prescriptions only (called a PDP plan) or get Part D coverage through a Medicare Advantage plan (most include health and prescription benefits).
The 4 phases of coverage work like this in 2023:
Phase 1: Yearly Deductible Phase
You begin this payment phase when you fill your first prescription of the year. You pay the total cost of your drugs until you've met your plan's annual deductible.
Phase 2: Initial Coverage
Once you've met your annual deductible, you move into the INITIAL COVERAGE phase. During this phase, you share costs with the plan – through copays or coinsurance. You remain in this payment phase until the shared total (what you AND Blue Cross pay) reaches a combined total of $4,660.
Phase 3: Coverage Gap (or “Donut Hole”)
Once you (and Blue Cross) together have reached a combined total drug cost spend of $4,660, you enter the COVERAGE GAP. During this payment phase in 2023, you'll pay 25% of generic drug costs and 25% of brand name drugs. You remain in the “Donut Hole” until your personal total out-of-pocket costs reach $7,400.
Phase 4: Catastrophic Coverage
Once your total out-of-pocket costs reach $7,400, you move into the CATASTROPHIC phase. In this phase, you pay a small copay or coinsurance and Blue Cross pays the rest. For 2023 you'll pay $4.15 for generic drugs/$10.35 for all other drugs, or 5% of the drug cost, whichever is higher. You remain in this final phase through the remainder of the calendar year.
How Part D Works- Did you Know?
The best time to enroll in a Medicare Prescription Drug Plan (PDP) like BlueRx is when you are first eligible for Medicare. If you delay your enrollment in Part D beyond your Initial Enrollment Period — and you don’t have “creditable coverage” as good as the Medicare standard benefit design — you may pay a penalty for late enrollment if you decide you want this coverage later.
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