A simple explanation of Medicare Part D plans and how to find the right one.
Medicare Part D is the prescription-drug benefit portion of the Medicare program. Anyone receiving Medicare benefits can enroll in a Medicare Part D plan. An individual is eligible for Medicare benefits if the individual is age 65 or older, has certain disabilities, or suffers from end-stage kidney failure.
Medicare Part D is administered by private insurers, although regulated by the federal government. There are two types of plans: stand-alone prescription drug plans (PDPs) and Medicare Advantage plans covering prescription drugs (MA-PDs). Medicare recipients most often choose PDPs. Such plans are appropriate for Medicare recipients that receive all Medicare services through an open network, known as the fee-for-service system. However, Medicare recipients that receive Medicare services through a limited network plan, meaning a managed care plan or health maintenance organization, would likely enroll in an MA-PD. Medicare recipients can enroll in a Medicare Part D plan during the recipient’s initial Medicare enrollment period or during the annual open enrollment period, which is Oct. 15 through Dec. 7.
Insurers that offer Medicare Part D plans differ by region. The types of drugs covered and associated costs also vary greatly. Medicare recipients are usually required to pay a deductible. After the deductible is reached, recipients pay a certain percentage of the costs, up to a capped amount. Once the cap is hit, the recipient is responsible for all drug costs until the recipient reaches a catastrophic limit. The coverage gap after hitting the capped amount and before reaching the catastrophic limit is commonly referred to as the “donut hole.” Even though most people choose PDPs rather than MA-PDs, the advantage of choosing an MA-PD is that some MA-PD plans offer coverage to protect against the gap. The simplest way to find Medicare Part D plans and compare costs and drug coverage, including gap coverage, is to use the Medicare Plan Finder on Medicare.gov.