What will Medicare Part D cost me overall?
If you do not qualify for Extra Help with costs, you will pay:
- Monthly premiums.
- Yearly deductible (if any).
- Copay or coinsurance for each prescription (until you hit the coverage gap).
If you do qualify for Extra Help with costs because of your limited income and assets, you will pay:
- Low or no monthly premiums.
- Low or no yearly deductible.
- Low or no copays or coinsurance for each prescription.
What will I pay during the coverage gap?
Your total drug costs include what you and the plan pay for your prescriptions. If these are greater than $2,970 in 2013 ($2,850 in 2014), you will probably hit the “coverage gap,” sometimes called the donut hole. During this period, you will pay a discounted percentage of your drug costs.
While you are in the coverage gap, you will get discounts on certain drugs your plan covers. In 2013, you will pay 79% of the cost for generic drugs and 47.5% of the cost for brand name drugs (in 2014, you pay 72% for generics, 47.5% for brand-name drugs). You will also pay a small fee to the pharmacy for brand name drugs. The amount you pay for drugs, plus the 50% discount paid by the drug manufacturer for brand-name drugs, will count toward your total out-of-pocket costs. You do not need to do anything to get the discount. Your pharmacy will give it to you automatically.
Your total drug costs include the amount you and the drug manufacturer spend. When these costs reach $3,763.75 in 2013 ($2,605 in 2014), you are no longer in the coverage gap. After this, you will pay 5% or less of the drug cost, and the plan will pay the remaining 95%.
If you qualify for Extra Help with costs, you will not have a coverage gap. You will continue to pay reduced or no copays or coinsurance for each prescription. Depending on how much income you have, your copays or coinsurance may get even lower when your total drug costs(what you and your plan pay for your drugs) reach $6,733.75 ($6455. in 2014).
You can choose from many plans with different costs. In 2013, you will find plans with high and low monthly premiums, deductibles ranging from $0 to $325 (up to $310 in 2014), and varied copay and coinsurance amounts.
What will probably matter most to you is the OVERALL amount you will have to pay for your drugs each year. This overall annual cost includes
- Your premiums.
- Your deductibles, copayments or coinsurance for each prescription.
- Any drug costs you pay during the coverage gap.
In most cases, you should start by looking for plans with the lowest overall annual costs. Consider the drugs you are taking and how much of their costs each plan will pay.
When you are ready to find out the costs of specific plans in your area, use the link to the Medicare.gov Plan Finder at the bottom of this page.
Terms you should understand
Premium - The amount you pay the plan each month. The average, nationwide monthly premium for 2013 will be $30, although plan costs will vary depending on the plan you choose and where you live. You will generally only want to choose a plan with low premiums if it ALSO has the lowest OVERALL annual cost per year including the costs for the drugs you take.
Deductible – The amount that you have to pay for drugs before your prescription drug plan starts helping you pay.
- Some plans will have a $0 deductible, meaning the plan begins paying for your prescriptions right away.
- All plans will have a deductible of no more than $325 in 2013 ($310 in 2014). If you select one of these plans, you will pay all of your drug costs from $1 to $325, and then the plan starts helping you pay the costs.
- You will generally only want to choose a plan with a$0 deductible if it ALSO has the lowest OVERALL annual cost per year, including the costs for the drugs you take.
Coinsurance and Copayments – Your share of the cost of drugs that your Medicare Prescription Drug Plan covers.
- A small number of plans will require you to pay a percentage of the price of each medication. This is called coinsurance. For example, if the prescription costs $100, and your coinsurance is 25%, you will pay $25.
- However, most plans will ask you to pay a fixed dollar amount for your prescriptions. This is called a copayment, or copay. For example, you might have to pay $5 for a generic drug, $25 for a “preferred” brand name drug, and $40 for a non-preferred brand name drug.
- You will generally only want to select a plan with low copays or coinsurance if it ALSO has the lowest OVERALL annual cost per year including the costs for the drugs you take.
Coverage Gap – The point in your Part D benefit in which most Medicare Prescription Drug Plans stop paying for your drugs. This is sometimes called the donut hole. As of 2011, the donut hole has changed. You now will get more help with your drug costs from discounts.
- All plans in 2013 will provide a discount in the coverage gap. With the discount, you will pay 79% of the cost of generic drugs and 47.5% of the cost of brand name drugs until total drug costs reach $3,763.75.
- If you think your total drug costs may be higher than $2,970 per year, you may want to consider a plan that will help pay for your medications during the coverage gap. There are a small number of plans that will pay for your generic and/or brand name drugs during the coverage gap.
Catastrophic coverage –If your total drug costs are more than $6,733.75 in 2013, all the Medicare Prescription Drug Plans will cover at least 95% of your drug costs for the rest of that year.
- Once you have spent $4,750 of your own money for drugs in 2013, you would then pay 5% or less of the cost of your drugs for the rest of the calendar year. The $4,750 includes the 50% the drug manufacturer paid for brand-name drugs while you were in the coverage gap. These costs are called your out-of-pocket costs. Medicare and your plan will pay for the rest of your drug costs.
- There is no cap or limit on the amount of your drug costs after you have spent $4,750 out of pocket.
Remember: You will have different options and costs depending whether you have
- Original Medicare Part A and B with a stand-alone Prescription Drug Plan or
- A Medicare Advantage plan.