Basics of a Prescription Drug Plan
A prescription drug plan (PDP) is a stand-alone plan, covering only prescription drugs. Enrollees who choose the option of prescription drug coverage through a Medicare Advantage plan would also have coverage for other medical expenses as part of that plan.
Medicare will pay part of the costs of prescription drug coverage for everyone who enrolls in a plan. How much you pay will depend on which prescription drug plan you choose and whether or not you qualify for extra help which helps cover the costs of this coverage.
Medicare Part D Premium
The average nationwide monthly premium for 2019 is $33.19, although plan costs 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 cost per year, including the costs for the drugs you take.
Medicare Part D Deductible
Remember a plan with a deductible will not pay for your prescriptions until you pay the deductible amount out-of-pocket. The highest deductible a plan can charge in 2019 is $415. Some plans offer $0 deductible and will pay for your prescriptions right away. Other plans may offer a deductible lower than the maximum of $415 like $150 or $250. You will generally only want to choose a plan with a $0 deductible if it also has the lowest overall cost per year, including the costs for the drugs you take.
Copayments and Coinsurance
A copayment, or copay, is a fixed dollar amount for your prescriptions. 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.
A coinsurance is a percentage of the price of your prescription. Typically plans require coinsurance for drugs listed in higher tiers like tier 4 and tier 5 drugs. For example, if your prescription costs $350, and your coinsurance is 25%, you will pay $87.50.
It is possible that some of your medications require a fixed copayment and others a coinsurance. Be sure to check the cost of each medication you take with the plan.
Each plan places the drugs it will pay for in different levels, called tiers. Each tier has its own copay or coinsurance amount. Your drugs may be included in all the plans in your area, but they could be listed on different tiers with different copay amounts.
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.