What is Medicare Part D?
Medicare Part D is the portion of Medicare that provides prescription drug coverage in addition to Medicare Part A and Part B services. Blue Cross and Blue Shield of Alabama has a contract with Medicare to provide important options, like prescription drug coverage, to Medicare beneficiaries. Part D can be extra coverage, if you already have Original Medicare or if you have a Medicare Supplement plan, to cover the cost of your prescription drugs. Most Medicare Advantage plans include prescription drug coverage. But, if you are on Original Medicare alone (with or without a Medicare Supplement), you can add a stand-alone Part D plan to give you the prescription drug coverage you need.
Each prescription drug plan, or PDP has a list of covered drugs (formulary), including generic, brand-name and specialty prescription drugs. Typically, prescription drugs are categorized into tiers. Each tier is available at varying costs, with exceptions present to make certain drugs more affordable if they are considered medically necessary by a health care provider or based on your income.
With Medicare Part D, you will be able to choose from an extensive network of pharmacies for your prescription drug needs. Blue Cross and Blue Shield of Alabama has more than 63,000 pharmacies in our nationwide network, including select mail-order pharmacies, as a convenient option for prescription refills.
Here are the basics of how every Medicare Part D plan works:
- Deductible Phase
If your plan has a Deductible, you must first pay that amount before benefits begin.
- Initial Coverage Phase
Once you meet your deductible (if any), you enter the Initial Coverage Phase. Generally you pay a low, predictable copay or coinsurance amount for each covered prescription and the plan pays the rest. This phase lasts until the total cost of prescription drugs (what you and the plan pay) reaches $3,310.
- Coverage Gap Phase
Once total drug costs reach $3,310, you move into the Coverage Gap Phase or "donut hole." During this phase, you will be responsible for paying 58% of the cost for generic prescriptions and 45% of the cost of covered brand-name prescription drugs. This phase lasts until your out-of-pocket costs reach $4,850 for covered drugs.
- Catastrophic Phase
Once your out-of-pocket costs reach $4,850, you enter what is called the Catastrophic Phase. During this phase, you pay $2.95 for generics and $7.40 for brand-name drugs, or 5% coinsurance per prescription, whichever is greater. The plan pays the rest.
Who is eligible to apply for Medicare Part D?
Enrollment for Medicare Part D is not automatic. You may select prescription drug coverage when you first enroll in Original Medicare as a separate plan, or you may choose a Medicare Advantage plan that includes prescription drug coverage. If you have a Medicare Supplement Plan, or Medigap, that does not include drug coverage (including all Medigap policies sold after January 1, 2006), you can choose a Medicare Part D plan to help cover the cost of your medications.
When you are first eligible to apply for Original Medicare, you may want to enroll in Medicare Part D. If you miss your initial enrollment period, you will have to wait until the next Annual Election Period (October 15 to December 7) to sign up for prescription drug coverage.
If you qualify for Original Medicare but still have health insurance coverage through an individual plan that does not have creditable drug coverage, you can join a Medicare Part D plan.
Why do I need prescription drug coverage (Medicare Part D)?
Medicare Part D and Part C are important options that can help you pay some of the out-of-pocket costs not covered by Original Medicare. Typically, hospital outpatient drugs (or those that are considered self-administered) are not covered by Medicare Part B and may be covered by your prescription drug plan under certain circumstances.
Even if you are not currently taking medications on a regular basis, you may want to apply for Medicare Part D to avoid a late enrollment penalty when you do enroll. The late enrollment penalty is an additional one percent of the national average PDP premium for every month that you were without qualifying drug coverage. This penalty will be added to your monthly premium for as long as you have Medicare drug coverage. For example: If you wait 15 months to apply for prescription drug coverage, your monthly premium will be 15 percent higher for as long as you have Medicare.
It's important to be aware that all Medicare drug plans have a coverage gap (sometimes called the "donut hole"). During this period, you will be required to pay a higher portion of your prescription drug costs. The coverage gap begins when you and your drug plan together have spent a certain amount for covered drugs. Not everyone will enter the coverage gap because their drug costs won't be high enough.
When can I apply for Medicare Part D to receive prescription drug coverage?
When you decide whether you want a Medicare Part D or Medicare Part C (Medicare Advantage) plan, there are four specific enrollment periods during which you may choose to sign up for prescription drug coverage.
Initial Enrollment Period: You can sign up for a Medicare Prescription Drug Plan or Medicare Advantage Plan (that includes drug coverage) during your seven-month Initial Enrollment Period (IEP). This period includes the three months before your 65th birthday, the month of your birthday, and the three months after you turn 65.
If you are already enrolled in Medicare Part A coverage and newly enrolled in Medicare Part B during the General Enrollment Period (January 1–March 31), you may sign up for a Medicare Advantage Plan (that includes drug coverage) between April 1 and June 30 of the same year.
If you do have Medicare Part A and enrolled in Medicare Part B during the General Enrollment Period (January 1-March 31), you may sign up for a Medicare Prescription Drug Plan between April 1 and June 30 of the same year.
Annual Election Period: Each year from October 15 to December 7, after you are enrolled in Medicare coverage, you may sign up for a Prescription Drug Plan or a Medicare Advantage plan to begin January 1 of the following year. Additionally, changes may be made to any existing Medicare plan during this time.
Special Election Period: If you experience a loss of health insurance coverage due to a specific life event, you may qualify for a Special Election Period during which you may select prescription drug coverage. A Special Election Period can be based on any of the following special circumstances:
- Moving into a new Medicare coverage area
- No longer eligible for Medicaid
- Involuntarily losing prescription drug coverage from your current plan
- Newly enrolling or disenrolling from an employer group health plan
- Changes in your current plan's contract with Medicare
- Other special circumstances
This eligibility period will be determined based on the date you lost coverage.
Blue Cross and Blue Shield of Alabama provides stand-alone prescription drug plans and Medicare Advantage plans with drug coverage to fit your needs. Choose your prescription drug coverage today.