What donut hole? Facts on Medicare Part D

November 18, 2020 | Managing Prescriptions

If you or a loved one are nearing retirement age, it’s time to start thinking about medication insurance. Medicare Part D plans will look a little different in 2021 than in past years so here’s what you should know before evaluating your options.

Medicare Part D covers prescriptions.

It is a federal program administered through private insurance companies. Keep in mind, Med Part D isn’t just for your medications today. It also insures you for any new medications your doctors prescribe in the future. Many people eventually need prescription drugs, whether for minor illness or a chronic conditions, and Medicare Part D protects against unexpected costs.

There’s a late penalty.

Everyone with Medicare Part A or Part B is eligible to enroll but it’s best to do so when you first turn 65. There is a late penalty for waiting to enroll and it can be as high as 10% for each year you put it off.

Open enrollment is now through December 7th.

If you already have a Medicare Part D plan, you can shop around and switch plans without incurring additional costs. Open enrollment is October 15th to December 7th each year and your coverage begins January 1st.

You move through 4 stages of coverage as your medication spending increases.

  1. Annual deductible. You pay the network discounted price for your medications until you meet your annual deductible. This amount differs by company and can be up to $445.
  2. Initial coverage. Once you’ve met your deductible, you are covered by initial coverage in which you pay your plan’s cost share. In 2021, you will be eligible for initial coverage until you and your plan have spent a total of $4,130 in out-of-pocket costs.
  3. Former donut hole. In past years, you entered the donut hole once your initial coverage limit was reached. Thankfully, those days are over. Instead, you’ll have a 25% copay until you reach $6,350 in out-of-pocket costs.
  4. Catastrophic coverage. Your plan (and the U.S. government) pay 95% of the costs of your prescriptions through the rest of the year. This helps to limit the cost to you, especially on expensive medications.

It’s confusing. We can help.

Our pharmacists are happy to evaluate the best Medicare Part D option to fit your prescriptions. We offer a unique perspective on prescription coverage and people who enroll with us save an average of $1,150 per year. Contact any of our locations to schedule your free review.