Medicare Part D plans can be very confusing!
Your prescription costs seem to be constantly changing and your prices in March might not look anything like what you thought they would during the prior Annual Enrollment Period. It's frustrating when you don't know exactly what to expect. There are four different stages to the Medicare Part D benefit and we are going to help you understand them.
Deductible Phase
Enrollees pay 100% of their drug costs, up to $505 in 2023. Most plans do have a standard deductible.
Some low cost drugs are exempt from the deductible.
Initial Coverage Phase
Plan members pay 25% of total drug costs while the Part D plans pay 75%.
The member and plan will pay no more than a combined total $5,030 in 2024.
Some Part D plans charge a mix of copayments and coinsurance in this phase rather than a standard 25% coinsurance rate.
Coverage Gap Phase
Enrollees will pay 25% of total drug costs for both brand-name and generic drugs.
The plan pays the remaining 75% of generic drug costs and 5% of brand drug costs.
Drug companies provide a 70% price discount on brand names.
Catastrophic Phase
Medicare pays 80% of total drug costs (known as “reinsurance”)
Plans pay 20%.
Members qualify for catastrophic coverage when the amount that they pay out of pocket plus the value of the manufacturer discount on the price of brand-name drugs in the coverage gap phase exceeds a certain threshold amount. In 2024, the catastrophic threshold is set at $8,000, and enrollees themselves will pay about $3,300 out of pocket before reaching the catastrophic phase (this estimate is based on using brand drugs only).
We hope this makes a sometimes very confusing plan a littler easier to navigate. Bookmark this page for future reference and remember, if you still have questions, we are here for you!
Thank you for reading!
