The Costs of Medicare Part D
As with other Medicare costs, Medicare Part D comes with some costs you’ll want to account for.
Medicare Part D plan premiums vary depending on your chosen program and where you live. The average cost of a Part D plan is approximately $30, but there are some plans under $10 per month. You may be required to pay copays, deductibles, and coinsurance in addition to your monthly premium.
If you’re a higher-income Medicare beneficiary, you may be subject to an Income Related Monthly Adjustment Amount, or IRMAA. If that’s the case, your monthly premium will have an additional amount added.
The Medicare standard model allows prescription drug plans to implement a deductible if it’s not more than the outlined deductible. Some plans will have a deductible that applies to all tiers, while others may not have a deductible at all or may not apply to all drug tiers.
Copayments or Coinsurance
You’ll be responsible for a copay or coinsurance when picking up your prescriptions from the pharmacy. The amount is determined by which tier the medication falls in according to your plan’s formulary. If your plan has a deductible, you may have to meet the deductible before the copay or coinsurance begins.
Donut Hole (Coverage Gap)
Once the retail costs of your prescriptions reach a set amount, you’ll fall into the coverage gap. In this phase, you’ll be responsible for a 25 percent coinsurance of the cost of the prescription. You will stay in the coverage gap until your out-of-pocket prescription costs reach the catastrophic amount.
Once you reach your true out-of-pocket max for the year, you’ll pay the greater of a small copay or up to a 5 percent coinsurance. You’ll remain in this catastrophic coverage phase until the end of the calendar year. Once the new year begins, your coverage phases reset.
For Medicare beneficiaries with lower incomes, there is a low-income subsidy program to help cover the costs of drug plan premiums and costs. The level of extra help will depend on your income. If a beneficiary receives extra help, their monthly premium and deductible will be lowered or eliminated. In addition, their copayments and coinsurance are significantly reduced.