Prescription Drug Plans
4 Important Facts
Medicare prescription drug plans; also known as Part D or PDP plans are standalone plans that are provided by private insurance companies. A Part D plan provides coverage for prescription drugs and medications. The purpose of such plans is to lower the cost of prescription drugs allowing treatment to be more accessible. Some vaccines may also be covered.
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Medicare Part D plans have certain things you must take into consideration when comparing one PDP plan vs another. It all depends on your needs and what is best for you.
1
Monthly Premiums
Your monthly premium is how much you pay per month to keep the plan active. The premium can vary greatly depending on your personal needs and preferences. But regardless of the premium, it is ideal that you understand the pricing of your medications and if those medications are covered under a given plan. Premiums can increase from year to year so be sure to read all communication from your insurance carrier to be notified of any changes.
2
Drug Deductibles for Medicare
Prescription drug plans have deductibles just like individual or employer health insurance plans. The deductibles for each plan are located in the plan's summary of benefits. But when comparing multiple plans it is best to seek out professional help from an insurance broker. There are plans available with a $0 deductible, but just because a deductible is $0 doesn't mean that it would be the best plan for you. Lower deductible oftentimes means a higher premium, keep this in mind.
3
Initial coverage limit (ICL)
Medicare Prescription drug plans usually have four different parts of coverage: (1) Deductible, (2) Initial Coverage, (3) Coverage Gap, and (4) Catastrophic Coverage. Your monthly premium does not affect these phases.
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The initial coverage phase is where most people stay throughout the year. The initial coverage phase has an initial coverage limit. The initial coverage limit is a fixed dollar amount that separates the initial coverage phase from the coverage gap. Once you surpass the limit you will move into the next phase. For 2023, the ICL is $4,660 and is based on the plan's formulary drugs retail value.
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4
Formulary
Every plan that offers prescription drug coverage has a list of drugs that a specific plan covers this is called the formulary. The formulary is there as a guide to ensure that your medications are covered under a given plan. The formularies are usually updated on an annual basis, so it is important that you review this document annually. Any changes to the formulary will be sent to beneficiaries with a document called an annual notice of change (ANOC).
Compare PDP plans
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