Medicare Prescription Drug Plans, Top 6 Things to Know Before Purchasing:

Top 6 Things to Know Before Purchasing:


Medicare Prescription Drug Plans

You have two options to get Medicare prescription drug plans. If you have Original Medicare, you can choose and join a Medicare Prescription Drug Plan or you can choose to join a Medicare Advantage Plan (like an HMO or PPO) that includes Medicare drug coverage. Whichever you choose, you should know that prescription drug coverage can vary by cost, coverage, and convenience. Some of these factors might be more important to you than others, depending on your situation and prescription drug needs. If you join either type of drug plan, each year in the fall you will get information about plan changes. You should review your prescription drug needs and compare Medicare prescription drug plans.


When you purchase a Medicare prescription drug plan, you pay part of the costs, and Medicare pays part of the costs. Your costs will vary depending on which Medicare prescription drug plan you choose. You should look at your current prescription drug costs to find the Medicare prescription drug plan that meets your needs.


This is what you pay each month to a health or drug plan to be a member. Premiums vary from one Medicare prescription drug plan to another.


This is the amount you must pay each year for your prescription drugs before your Medicare prescription drug plan starts to pay any of the costs. Deductibles vary by Medicare prescription drug plan. No Medicare prescription drug plan may have a deductible more than Medicares standard annual prescription drug deductible. Some Medicare prescription drug plans have no deductible.


This is the amount you pay for each of your prescription drugs after you have paid the annual deductible. Some Medicare drug plans, you pay the same co-payment (a set amount) or coinsurance (a percentage of the cost) for any prescription. In most Medicare prescription drug plans, there might be different levels or “tiers” of coinsurance or co-payments, with different costs. For example, you might have to pay a lower coinsurance for generic drugs than brand-name drugs, or a lower co-payment for some brand-name drugs than other more expensive brand-name drugs. The amount of the coinsurance or co-payment may change during the year as your costs increase.

Coverage Gap:

Some Medicare Prescription Drug Plans have a “coverage gap” (or Donut Hole). This means that when you and your Medicare drug plan have spent a certain amount of money for your covered drugs, you pay all your drug costs. You must also continue paying the plan’s monthly premium even while you are in the coverage gap.

“Catastrophic” Coverage:

However, if your costs in the coverage gap reach a certain amount, referred to as the catastrophic limit, Medicare starts to pay again, and your coinsurance or co-payments will probably be much lower than they were before. For plans with a coverage gap, the most you will ever have to pay out-of-pocket before you are out of the coverage gap varies year to year according to Medicares national standards. Each state offers at least one Medicare drug plan that helps with coverage during the gap (generally for an extra premium).


A formulary is a list of the drugs that a Medicare prescription drug plan covers. It includes how much you pay for each drug. (If the plan uses “tiers,” the formulary lists which drugs are in which tiers.) Formularies include both generic drugs and brand-name drugs. In general, the formulary must include most types of drugs that people with Medicare use.

Prior Authorization:

To be sure certain people use drugs correctly, and only when they are medically necessary, Medicare prescription drug plans may require a “prior authorization.” This means that before the Medicare prescription drug plan will cover certain prescriptions, your doctor must contact the plan. Your doctor may need to provide additional information about why the drug is medically necessary for you, before you can fill the prescriptions.


Medicare prescription drug plans have service areas, and they must contract with pharmacies in their service areas. Check with each Medicare prescription drug plan you are considering to make sure that your current pharmacy is in the plan or that there are pharmacies convenient to you. Also, some Medicare prescription drug plans may offer a mail-order program that will allow you to have drugs sent directly to your home. You should consider what is the most cost-effective and convenient way to have your prescriptions filled.

Peace of Mind Now and in the Future:

Even if you don’t take a lot of prescription drugs now, you still should consider joining a Medicare prescription drug plan. As we age, most people need prescription drugs to stay healthy. Joining a Medicare prescription drug plan now gives you peace of mind knowing you have drug coverage if you need it. For most people, joining when you are first eligible means you won’t have to pay a late enrollment penalty (higher premium) if you choose to join later. Once you have to pay this penalty, you will have to pay it as long as you have a Medicare prescription drug plan. If you reach the point where you have spent enough to escape the Medicare prescription drug plan Coverage Gap (or Donut Hole) and reach the Catastrophic Coverage Stage, your Medicare prescription drug plan will pay most of your remaining drug costs. This protection could start even sooner in some Medicare prescription drug plans.

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