Medicare Prescription Plans

Medicare Part D Standard Basic Benefit 2018
Prescription drug plans offer a wide variety of deductibles and co-payments. However, all plans have to follow this basic benefit outline.
Total Drug
Expenditures

  Plan pays 95% for generic and

brand name drugs

Enrollee pays

5% co-insurance

Enrollee
Expenditure
When the retail cost of drugs exceed $3,750 you enter the Gap  Coverage Gap

Enrollee will pay: 44% of generic costs
35% of brand costs
Plan pays 56% for generics and 10% for brands
$5,000
$3750 Drug Plan Co-pays

$405  Deductibles range from

$0 to $405

$405
$0 $0

Catastrophic Coverage: The enrollee will have a co-payment of $3.35 for generic drugs or $8.35 for brand name drugs, or 5% coinsurance, whichever is higher.

 

Additional Part D Premium for High Income Earners

Medicare charges high income earners an additional Part D premium. The premium is collected by insurance companies and is added to the plan’s standard premium.


Tax Filing Status

Individual

Joint

Married but Separate

Part D Premium is

If Your 2016 Annual Income Was*

Plan Premium

$85,000 or less

$170,000 or less

$85,000 or less

Plan Premium

+

$13.00

$85,001 – $107,000

$170,001 – $214,000

Plan Premium

+

$33.60

$107,001 -$133,500

$214,001 – $267,000

Plan Premium

+

$54.20

$133,501 – $160,000

$267,001 – $320,000

Plan Premium

+

$74.80

Above $160,000

Above $320,000

Above $85,000

* Social Security uses the income reported on your federal tax return two years ago to determine your Part B and Part D premium. If your income has decreased, you can ask for a more recent tax year to be used to determine your premium, but you must meet certain criteria.

Selecting a Part D Plan

1. Make sure all your medications are on the plan’s formulary list.

2. Each plan places the drugs on its formulary list in tiers, and then sets a co-pay for each tier. See which tier the plan places each of your drugs. One year, some plans rated Crestor a tier 1, some plans rated it a tier 2, and some rated it a tier 3. The price difference between tiers is significant.

3. Avoid plans that require Step Therapy. This means the company will initially supply your medication, but will require you to transition to a less expensive drug the next time the prescription is filled.

4. Does the plan place limits on any of your medications? Plans will ask consumers of an expensive drug to switch to a similar prescription with a lower cost.

5. Look at the plan’s mail order program. What are the savings available through mail order when compared to a retail pharmacy?

6. Is your pharmacy on the plan’s preferred pharmacy list? If not, you could pay higher co-pays.

Part D Late Enrollment Penalty

Medicare imposes a Late Enrollment Penalty (LEP) for beneficiaries who do not initially enroll in a Part D plan when they transition to Medicare, then sign up at a later date. The LEP equation is (1% per month of the national average Part D monthly plan premium) X (the number of months without creditable drug coverage).

Example: John, who did not take medications, turned 65 in July 2016 and decided not to enroll in a Part D plan. In May of 2017, John was prescribed high blood pressure and cholesterol medications. John decided to enroll in a Part D plan for 2018 during the Annual Enrollment Period. Since John could have had Part D coverage for 18 months prior to enrolling in a plan (six months in 2016 plus twelve months in 2017), he will be assessed an 18% Late Enrollment Penalty. The LEP in 2018 was $0.35/month. John’s penalty is $6.30 (.35 x 18) which will be added to the monthly premium of the Part D plan he selects for as long as he has any Part D plan.

The 2018 National Average Part D Premium is $35.02.

The LEP for 2018 is $0.35 X the number of months without credible drug coverage.