Oh boy, does Part D give people the most headaches…. ever.
Prior to 2006, Medicare didn’t even provide prescription coverage, so we’ll go with that it’s a positive.
Original Medicare consists of Parts A and B. That’s for hospital and medical coverage alone. When you enroll into Original Medicare and then purchase a Medigap contract to go along with it, this combination does not provide any coverage for prescription medications.
So, you’ll need to add a Part D policy or enroll into a Medicare Advantage plan to get your prescription coverage. If you purchase a stand along Part D plan, you will pay a monthly premium to an insurance carrier for this coverage. If you secure your drug coverage through a Medicare Advantage plan it is typically "bundled" into the monthly plan premium.
In 2024, the Inflation Reduction Act will bring new changes to the Part D world. One of the most immediate changes people will see is that there is a first time ever "cap" to what a person will pay with a prescription drug plan. That cap is approximately $3300 per year in 2024 and will be reduced to $2000 in 2025.
The cap will apply to all covered drugs on a plans formulary and will not apply to what you pay for costs using GoodRx and such.
Due to these changes, you'll want to understand your Part D plans more than ever. Watch your video below discussing this change and a few others.
Part D is technically “optional” coverage. However, we never, ever suggest that any person NOT have prescription drug coverage. There are a couple of reasons for that. We want to bring this up because we'll often talk to people that take no medications as they turn 65. That's a wonderful thing but you really do need prescription coverage and here are two reasons why.
If you do not purchase a Part D plan during your eligibility windows (several windows exist), you cannot purchase one “anytime you need one”. It’s sort of like purchasing homeowners insurance after your home burns down…?
So, imagine that your doctor prescribes you Eliquis in July. You cannot just go get a drug plan that will cover Eliquis (high retail cost, roughly $5,000 annually). So, you will be relegated to using GoodRx and paying cash for a very expensive medication until you are able to purchase a prescription drug plan in the Annual Election Period from October 15 until December 7.
If you do not purchase the Part D plan during your eligibility window and then go and purchase a plan seven years down the road for example? You’ll be financially penalized for not having one in place since you were age 65 or when you last had creditable drug coverage.
**So many people don’t realize that and since they are healthy, don’t take any medications or perhaps take a minor Tier 1 prescription? They don’t purchase a drug plan. When they go to get one? There is sticker shock. The penalty is currently around 34 cents per month for every month you don’t have a plan in place. Doesn’t sound like much but it can add up. Oh, and the financial penalty remains for every month of your entire life (as long as you have a Part D plan).
Please just get Part D coverage when you’re first able to. It’s a necessary evil.
The infamous Donut Hole is also part of the Part D conversation. Best way to talk about this crazy thing is to provide you our detailed video so you can rewind it 10x if need be! Essentially if you take high priced medications, you will likely pay a fair amount of money from your own pocket as well as having coverage in place.
How do you find the best Part D plan for you? Well, it can be done! Here is our YouTube video walking you step by step through the process so that you can find the most appropriate drug plan for you as you begin Medicare.
Also, head over to our new FREE Medicare course and you can learn more about Part B by using the modules on the left.
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