FAQ Friday: What is Medicare Part D?

Medicare Part D is Medicare’s drug coverage for prescriptions that you fill at a pharmacy and are not provided to you as outpatient drugs; for example your maintenance medications that you take home or if you are prescribed an antibiotic.
Every Medicare Part D drug plan has what is called a formulary, which is a list of medications covered by that plan. Each Medicare Part D drug plan has a different formulary. Within this formulary there are 5 tiers. Tier 1 is going to be the least expensive and tier 5 is going to be the most expensive. In each drug plans formulary the tiers can be priced differently because they are covered differently. For example: if you take Crestor, which is a brand name cholesterol pill. Crestor can be considered a tier 4 on one formulary, which would make it more expensive or it could be considered a tier 3 on another formulary, which would make it a lot more affordable. You want to shop for the drug plan that covers your medications under a lower tier in order for them to be more affordable.
The 5 tiers are listed below from cheapest to most expensive:
Tier 1 – Preferred Generics
Tier 2 – Generics
Tier 3 – Preferred Brands
Tier 4 – Non Preferred
Tier 5 – Specialty
There are 4 levels of coverage with each plan. The first level is the deductible phase or deductible level for the plans that have a deductible included in their coverage. This is when you will pay the full cost of your medications until you’ve reached your deductible. Most Part D drug plans will have a deductible and for 2018 the average deductible is $405. The second level is called the initial coverage level or the copay level. This is the level most of us are used to when you would only pay a nice copay for your medication. Tiers 1 and 2 are going to be really inexpensive, tier 3 is going to be reasonable and tiers 4 and 5 can get expensive. Level 3 is the infamous “Donut Hole” that most people have heard about and is thankfully being phased out. In this level of coverage you would have to pay around 45% of your brand name drug costs and around 80% of your generic costs. The last level is level 4 which is called the catastrophic level. At this point, you and the insurance company have paid a lot of money so the government is going to step in and subsidies both costs for you and the insurance company and you will pay around 5% for all of your medications.