How does a Prescription Drug Plan work?
If you’re turning 65 and currently taking prescription drugs, you may be wondering how you can get extra help with prescription drug costs.
Prescription Drug Plans or PDPs can either be part of a Medicare Advantage plan or a standalone PDP. In either case, a prescription drug plan helps to cover costs of medically necessary prescription drugs. Each Medicare Prescription Drug Plan has its own list of covered drugs called a formulary. Many Prescription drug plans place drugs into different “tiers” on their formularies based on their costs. Drugs in lower tiers cost less than drugs in higher tiers.
Drug plan costs will vary a bit depending on the drugs you use and the plan you choose. These costs are determined by whether you go to pharmacy in your plan’s network, the drugs are in the plan’s formulary, and whether you get extra help paying your Part D costs.
Most Medicare Prescription drug Plans have a coverage gap known as the “donut hole”. This means that there is a temporary limit of up to $2,850 of shared out-of-pocket costs for the beneficiary.
As soon as you and your plan spend more than that, you are responsible for 47.5% of the costs of brand name drugs and 72% of the costs of generic drugs(as of 2014).
Remember, that you can also receive prescription drug coverage through a Medicare Advantage Plan.
You can enroll into either an MAPD or Original Medicare with a standalone PDP during Open Enrollment Period on October 15th – December 7th where you can review, renew, or enroll into a plan of your choice.