Medicare Prescription Coverage Explained - 2017
Written by David Hecker


Medicare Part D, the part of Medicare that covers prescription drugs, is by far, the most complicated part of
Medicare.  In the state of Texas alone, there are over 25 different plans available.  Each one charging different
amounts for each medication, along with different premiums and deductibles.  Not only are the plans
complicated, but they change every year.  Many people choose their plans solely on the premium cost or
deductibles, or a recommendation from a friend or neighbor.  If you do this, there is a good chance that you
have the wrong plan for your needs, and will end up spending hundreds or even thousands of dollars more
than necessary.

Medicare Part D is run by private insurance companies, with the rules and regulations set by the Federal
Government.

Each Medicare Prescription Drug Plan has its own list of covered drugs (called a formulary).  The Medicare
drug plan places drugs into different “tiers” on the formulary.  Drugs in each tier have a different cost.  
Generally, a drug in a lower tier will cost less than a drug in a higher tier.

Your actual costs will vary depending on:

  • The specific drug you use… depending on the “tier” that it is in.  Each plan will put drugs in different        
    tiers.  Therefore, it is very important to research each plan and medication, before you choose a plan.

  • Cost will also depend on if you go to a pharmacy that is in your plan’s network, of if the pharmacy is a
    “Preferred” pharmacy within the network.

  • The cost will also depend on if the medication is on the plans formulary. Medicare only requires each
    plan to cover two drugs -- either brand-name or generic -- in each "therapeutic class" of medications.
    That means that for any disease or condition, a plan covers some but not all drugs.

  • The cost may also depend on whether you qualify for “Extra Help”.

A plan pays its share only of the drugs listed on its formulary and purchased from a pharmacy – either in a
store or a mail order service, that participates in that plan.  Unfortunately, every year each plan changes the
drugs in includes in it’s formulary or the tier that is on.  The fact that the plan now covers all of someone’s
drugs doesn’t mean that it will next year, or that the tier or price will remain the same.  This means the person
who is covered will need to review his or her plan each year.  Each fall, the plans will announce changes in
their formularies for the following year.  This is the time to look at new options for cost and coverage.  A good
Agent can be of enormous help with this!  Changes can be made each year during the Annual Election Period,
which runs from October 15 to December 7, for a January 1 effective date.

Many but not all plans have a deductible.  This is the amount that you pay before the insurance will start
paying.  In 2017, the standard deductible is $400.00.  After that, you will pay the co-pay for each medication,
depending on the “tier” that it is in on the plans formulary.

Every Medicare prescription plan has a “Coverage Gap” or “Doughnut Hole”.  It is mandated by the Federal
Government.  The gap is being slowly closed each year, due to the Affordable Care Act, but will not be fully
closed until 2020.  In 2017, after your Total Drug Costs reach $3700.00, you will be in the gap.  You will pay
45% of the cost of Brand Name drugs and 65% of the cost of generics.  You will stay in the gap until your Out-
Of-Pocket-Costs reach $4950.00.

After you come out of the Coverage Gap, you will then enter the “Catastrophic Coverage” phase.  While in
Catastrophic Coverage, you will pay a small co-pay or co-insurance.  You will pay 5% of the cost or $3.30 for
generics and $8.25 for brand names, whichever is higher.  Everything starts fresh on January 1 of each year.

When can I join? Anyone who is entitled to Medicare Part A or enrolled in Medicare Part B can join a
Medicare Part D prescription drug plan.  If someone doesn't enroll when first eligible for Medicare (usually at
age 65) but later does join a plan, they pay a penalty of 1 percent per month on the premiums for every month
they didn’t have coverage. This higher premium cost applies to any plan they enroll in, and it's permanent.  If a
Medicare Part D plan is offered in the region where you live, you can join the drug plan regardless of your
health history.

If you're already enrolled in a Medicare Part D prescription drug plan but would like to switch to a different Part
D plan, you can switch only during a seven-week enrollment period: October 15 through December 7 of each
year. However, if you receive Medicaid coverage as well as Medicare, you can switch Medicare Part D drug
plans at any time. You can also switch Part D plans at any time if you're a resident of a long-term care facility,
such as a nursing home.

David Hecker is a Licensed Insurance Agent based in Texas. He specializes in Medicare Products. He is
licensed in Texas, Louisiana and Arkansas. He can be reached at (903) 918-9091 or Toll Free (877) 454-
4959. E-mail:
dhecker@tx-medicaresupplement.com or on the web at: http://www.tx-medicaresupplement.comv
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Medicare Part D Prescription Coverage
Texas Medicare Supplement (Medigap) Specialist, Insurance  Medicare Services, Longview, TX
Texas Medicare Supplement (Medigap) Specialist, Insurance  Medicare Services, Longview, TX