| Many individuals misunderstand the benefit structure of Part D prescription benefits. Since the federal program began in 2006 improvements have been made periodically. From the inception of the program there has been a coverage gap or donut hole, a period when no coverage is available until the participant reaches a certain catastrophic dollar amount spent on medications. The catastrophic level was designed for those with extremely high prescription costs, a level most will never meet.
The Initial Coverage Phase of the Part D program involves an annual deductible, and during this phase of coverage the enrolled will pay approximately 25% of the drug costs after meeting the deductible. In 2019 things changed. The donut hole began to close after the ACA was passed into law in 2010, and by 2019 it was closed. Today, those enrolled in Part D coverage pay exactly 25% of their drug costs. Once they spend $7400 on prescriptions per year, they reach the catastrophic level. The catastrophic level requires the enrolled to pay 5% of their prescription costs.
The big news is that in 2025 all Part D plans will have a $2000 out of pocket maximum per year. Today there is no out of pocket maximum limit. Unfortunately, there is a lot of confusion about the out-of-pocket maximum, with many believing this benefit begins in 2023. It does not.
Regarding Plan D deductibles, most plans do not require that the annual deductible be met for many common generic medications. In fact, many plans don’t even require a co-pay for these drugs. The annual deductible is set by the federal government, and it has increased most years. In 2023 the annual deductible will be $505. Chances are the annual deductible will continue to increase, especially in 2025 when the maximum out of pocket is capped at $2000.
Part D prescription coverage is not included in Arizona Medicare supplement plans, a separate Part D policy must be purchased. The Medicare.gov website has an excellent tool to compare plans and prices. Medicare Advantage plans typically do include Part D coverage, but generally offer much smaller provider networks and much higher out of pocket exposure.
It cannot be stressed enough how important it is to shop your Part D prescription plan each year during open enrollment. Benefits, prices, and out of pocket costs can increase by thousands of dollars from one year to the next. |
