What is the cost of a Medicare Part D plan?
Your Medicare Part D prescription drug plan costs may include premiums, deductibles, co-pays or co-insurance. This is true for standalone plans and for Medicare Advantage (Part C) plans with built-in drug coverage.
Each company negotiates prices with pharmacies and drug manufacturers. Your co-pays and co-insurance are calculated using the plan's price for the drug and guidelines set by Medicare. The price you pay is usually discounted because you’re part of a big group purchase.
Cost sharing generally happens in a four-stage process.
- Stage 1: If your plan has a deductible, you pay the total cost of your drugs until you reach that deductible amount.
- Stage 2: You and the plan together share the total cost for your drugs.
- Stage 3: You pay most of the plan’s negotiated price for your drugs. The plan pays very little. This is the coverage gap or "donut hole." Medicare sets a limit for your spending in the coverage gap.
- Stage 4: The plan pays most of the cost for your drugs.
Each plan that provides drug coverage will share costs a little differently. You need to look at the details of any plan you're interested in to see how its Part D cost sharing works. If you like, you can view Part D prescription drug plans offered by UnitedHealthcare now.
Here's a general example of how the cost-sharing process might work. If your plan has a deductible, the steps below will start after you reach that deductible amount.
|Stage 1 Initial coverage You share costs with the plan, usually as co-pays, until the combined total paid by you and the plan hits $2,960 (in 2015). Your share of this amount can vary by plan. Your premium payments do not count toward your share.
|Stage 2 Coverage Gap ("donut hole") In 2015, you will pay 65% of the total cost for generic drugs and about 45% of the total costs for brand–name drugs until your yearly drug costs hit the 2015 out-of-pocket limit of $4,700. Your premium payments do not count toward this limit.
|Stage 3 Catastrophic coverage You pay a small co-pay or co-insurance each time you fill a prescription until year's end. The plan pays the rest.
Now look at these examples showing the savings that may be possible with a prescription drug plan versus without. Remember, these amounts are for illustration only. Actual costs with specific plans may be different.
Helen’s story: Moderate prescription drug spending
Enrico’s story: Heavy prescription drug spending