Prescription Drug Plan Benefit Stages

Information Provided by a Senior Prescription Drug Program Representative

There are four benefit stages associated with Medicare Part D prescription drug coverage:


The annual deductible for a prescription drug plan is $320, but this requirement can be met through any of three options:

  • Full Deductible: You pay the full $320 annual deductible before the plan starts to cover your prescription drug costs. A plan requiring you to pay the full deductible is going to charge you the lowest possible monthly premiums.
  • Partial Deductible: Some plans pay part of the deductible, while you pay the rest. Premiums are higher than those for full deductible plans, but partial deductible plans start picking up the cost of drugs sooner than plans that don’t help pay the deductible.
  • Zero Deductible: Some companies offer a zero deductible plan, relieving you of any obligation to pay a deductible. Zero deductible plans are the most expensive of these three options, but begin covering the cost of your Medicare-approved prescriptions immediately.

The deductible time frame is from January 1 to December 31, and your annual deductible must be met before your plan can start covering the cost of prescription drugs. Your MedicareMall Prescription Drug Plan Specialist will be happy to analyze some key factors in helping determine which deductible option and which company’s plan will work best for you.

Initial Coverage Period

The initial coverage period begins after your deductible is met. During this period your Medicare prescription drug plan starts to cover costs of your Medicare prescription drugs. During the initial coverage phase, you pay a co-payment or coinsurance, and your prescription drug plan pays its share for each covered drug until the combined amount (including deductible) paid by you and your drug plan reaches $2,930.

Donut Hole or Coverage Gap

Once you and your Medicare prescription drug plan have spent $2,930 for Medicare-approved drugs, you’ll be in the donut hole or coverage gap. Previously, seniors had to pay the full cost of prescription drugs while in the donut hole, but a 50% discount is now in place on covered brand name Medicare-approved prescription medications. The donut hole continues until your total out-of-pocket costs reach $4,700. This annual out-of-pocket spending amount includes your yearly deductible, co-payment, and coinsurance amounts.

There are plans that offer some degree of coverage during the gap phase. Generic drugs, for example, are covered by some plans. Prescription drug plans offering gap coverage may charge higher monthly premiums.

Catastrophic Coverage

Once you reach your Medicare prescription drug plan’s out-of-pocket limit of $4,700, you automatically get “catastrophic coverage” and are required to pay only a small co-payment or coinsurance amount for the rest of the year.

Note About Extra Help

If you have limited income and resources, you may qualify for Extra Help from Medicare that could pay for all or most of your monthly premiums, annual deductible, and prescription drug costs. If you receive Extra Help paying your prescription drug costs, you’ll have no coverage gap and will be required to pay, at most, a small co-payment once you reach catastrophic coverage. For more information about Extra Help, contact your local Social Security office or call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.

If you have any questions about Medicare Part D enrollment or benefit stages, one of MedicareMall’s expert representatives will be glad to provide answers and help get you on the road to the protection you’ll need in the days and years ahead. Contact a Senior Prescription Drug Plan Representative now and we’ll waste no time in getting you the Medicare supplement insurance plan and peace of mind you’re looking for.

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