By Dana Barrett

If you are currently a recipient of Original Medicare and need prescription drug coverage, we can answer your questions about what Medicare Part D covers.

Does Medicare Cover My Prescriptions?

Medicare Part D Plans are provided by private insurance companies. These plans cover all or a portion of the cost of prescription drugs for beneficiaries. If you’re enrolled in Original Medicare and have Medicare Part A (hospitalization) and Part B (physicians and services), you also have the option to enroll in a Part D prescription drug plan. Some Medicare Part D plans have deductibles, while others are free.

The private insurance companies that offer Medicare Part D are the ones who decide which drugs are covered under each of their plans. However, there are 6 classes of therapeutic medications that are mandatory for approval by Medicare as a Medicare Part D Plan. These are known as protected classes. Most Part D Plans cover commonly prescribed generic and brand-name medications as well.

Medicare Part D – 6 Protected Therapeutic Classes

  • Antineoplastics – which are used to treat cancer
  • Antiretrovirals – which are used to treat HIV/AIDS
  • Antipsychotics – to treat schizophrenia and other psychosis
  • Antidepressants – for mood disorders
  • Anticonvulsants – used to treat epilepsy and some mental health disorders
  • Immunosuppressants – used to prevent organ transplant rejection

Medications that are not covered under Medicare Part D include:

  • Fertility drugs
  • Erectile dysfunction drugs
  • Weight loss or weight gain medication
  • Drugs for cosmetic purposes
  • Over the counter medication
  • Vitamins and supplements

Part D Drug Plan Formularies

Each Medicare Part D Plan has a specific list of medications covered by their plan called a formulary. Formularies can differ between plans, and plan providers are required to publish their list of formularies on each plan’s website. The formulary for any plan can sometimes change mid-year, but the plan provider has to notify you when a change is made. They must also provide you with alternate medication options and how the cost will affect you. 

Coverage Tiers 

Many Medicare Part D Prescription drug plans manage drug costs by assigning coverage tiers to different medications. These coverage tiers show the percentage of cost covered for each drug and are listed on the plan’s formulary list. Drugs listed in lower tiers usually cost more than those in higher tiers. Tier one drugs have the lowest co-payment and usually include generic brands. There is also a specialty tier for expensive medications that have the highest copayment level.

Another way that Medicare Part D Prescription Plans control costs is with medication management strategies. These strategies are implemented by:

  • Requiring prior authorizations
  • Limiting prescribed quantities
  • Step therapy

Step therapy is a process where you’re required to try an alternate medication that is usually less expensive prior to receiving the brand-name drug that was initially prescribed.

What If my Part D Plan doesn’t Cover the Medication I Need?

If you have been prescribed medication for a new condition and that drug is not on your Plan D formulary list, you or your doctor can request a formulary exception. To file the request you’ll need a written statement from the prescribing physician. A Medicare representative should respond to your request within 72 hours.

Does Medicare Cover my Covid-19 Vaccine?

You pay nothing for a Covid-19 vaccination with Medicare. There is no copayment or deductible. Additionally, the provider who gives you your shot is not allowed to charge you an administration fee. Medicare Part D covers

all vaccinations. 

Coverage Periods

Your out-of-pocket drug costs will change throughout the 4 phases of Medicare Part D. Those phases are:

  • The deductible period
  • The initial coverage period
  • The coverage gap (donut hole) period 
  • Catastrophic coverage period

Deductible Period

When you first enroll in Part D, you will have to pay the full negotiated cost of your medications until you reach your deductible. Deductibles vary among plans but must stay below $445 for 2021. There are Part D plans that have no deductible. The negotiated costs are the price that the private Plan D insurance providers agree upon with drug manufacturers.

Initial Coverage Period

Once you’ve met your deductible, Medicare helps to pay a portion of your drug costs. You’ll be responsible for the copayment or coinsurance amount specified in your plan. Medicare beneficiaries who take few medications stay in this period for most or all of their coverage year. 

The Medicare Donut Hole

After the total cost of your prescription drugs reaches a specific amount ($4,130 for 2021) you enter a coverage gap phase referred to as “The Donut Hole”. The $4,130 amount represents total costs – the combination of your copayments and the amount Medicare paid for your prescriptions. While you are in the donut hole, you are responsible for paying 25% of the cost of your medications. 

As an example, if you are in the donut hole and fill a prescription with a cost of $80, you are responsible for paying $20 out-of-pocket. When the total cost of your medications for the year reaches $6550, you leave the donut hole and enter the Part D Plan phase called “Catastrophic Coverage”.

Catastrophic Coverage

When you reach $6,550 in out-of-pocket prescription drug expenses in 2021 you’re out of the coverage gap. This represents your maximum out-of-pocket expense for prescriptions during the coverage year. As soon as you clear the coverage gap (the donut hole), you are automatically bumped into the “catastrophic coverage.” phase. With catastrophic coverage, you are only responsible for paying coinsurance of about 5% until the end of the coverage year

The Take-Away

If you’re currently on Medicare or will be eligible soon, Medicare Part D can help with your out-of-pocket cost for drugs. Plans differ by benefit level, formularies, and deductible amounts. It’s wise to research plans to find the best fit for your budget and the specific medications that you need. You can also choose a Medicare Advantage (Part C) Plan that includes prescription drugs.