Medicare Part D / prescription drug plan costs vary by provider. It is important for you to pay attention to more than just the monthly premium cost. How much you pay for each prescription will depend on the plan. Usually you will have approximately 20 companies to choose from. The Part D national average premium is $33.06 in 2021. Costs vary by plan, however, here is an outline of costs you should expect to pay:
- Premium: A premium is the amount of money you spend every month to have access to the plan. The Federal government does not have restrictions on premium rates and pricing can change every year. Plans with extended coverage will cost more than basic plans. The Part D national average premium is $33.06 in 2021
- Annual Deductible – Stage 1: During this stage, you pay 100% for the costs of your prescriptions until you reach your deductible. Most plans have a deductible of $445 in 2021. Some plans have a lower deductible or have a $0 deductible.
- Initial Coverage – Stage 2: During this stage you will pay a copay or percentage of the drug costs when you fill your prescription. This stage will last until you reach $4,130 in 2021 in out-of-pocket expenses. Copays are a percentage of the total cost of the prescription drug. Based on your plan, you might pay 25% of the cost of your medication. Percentages can also be higher for prescription drugs in higher tiers or for brand-name versus generic medications. These amounts are set by your insurance provider.
- Donut Hole or Coverage Gap – Stage 3: Stage 3 is the Coverage Gap know as the Donut Hole. You are responsible for paying 25% to 37% of the costs for both brand name and generic prescriptions. You will stay in the donut hole until your costs reach $6,550 in 2021. Learn more: The Donut Hole Explained!
- Catastrophic Coverage – Stage 4: Once you reach catastrophic coverage, copays are typically lower than the Initial Coverage stage. You stay in this stage for the rest of the year.
- Formulary: Plans can vary the list of prescription drugs they cover (formulary) and how they place the drugs into different tiers on their formulary. The formulary may not include a specific medication that you take. If your doctor believes none of the drugs on your plan’s formulary will work for your condition, you can ask the plan to give you an exception and cover the drug. The formulary determines the copay amount that you will pay for your prescription.
Please keep in mind that your agent can only tell you the best priced plan for you based on the medications that you have been prescribed. Based on the costs above, some people can spend over $6000+ in prescription drug costs. If you take a brand name prescription, your costs will be high.