According to the Kaiser Family Foundation, 89% of adults 65 or older take at least one prescription drug. Over half of adults 65 or older take at least four prescription medications. If you aren’t taking prescription medications now, you probably will at some point while you’re on Medicare.
Fortunately, in 2006, Medicare introduced Medicare Part D to help seniors pay for prescription medications. As of 2019, nearly 45 million people were enrolled in a Part D plan.
How Medicare Part D covers prescription drugs
Medicare Part D plans are regulated by Medicare but administered by private insurance carriers. The insurers determine coverage and cost-sharing as long as they stay within Medicare’s parameters. Each Part D plan uses a formulary. A formulary is a list of covered medications and how much you’ll pay for each as well as any restrictions, such as step therapy or quantity limits. Most formularies use copayment tiers with medications in the lower tiers costing less out of pocket than those in the higher tiers.
Part D covers all types of prescription drugs including oral medications, inhalers, and ointments. If your doctor prescribes a medication, check the formulary to see if it’s covered and if there are any coverage restrictions. You’ll also see your copayment tier.
Most Part D plans have both preferred and non-preferred pharmacies. When you use a preferred pharmacy, you’ll pay less out-of-pocket for your medications.
A word about Part D plan stages
Most plans have an annual deductible, and if you haven’t met it, you may pay full price for your medications until it’s been satisfied. With that said, some Part D plans apply the deductible only to the top tiers.
As you fill covered prescriptions, you move throughout different payment stages depending on how much you and your plan spend on medications. If you move into the coverage gap, you pay 25% of the cost of covered medications instead of your copayment. In the fourth stage, catastrophic coverage, you typically pay just 5% or less of your actual drug costs.
How Medicare Part B covers prescription drugs
While Part D provides most of your drug coverage, Medicare Part B may cover certain medications in specific situations.
Part B covers outpatient care. It also covers certain drugs when administered by a medical professional, assuming you meet the coverage requirements. For example, Prolia is an injectable osteoporosis drug that is often administered in a doctor’s office. If you meet Medicare’s requirements for Part B coverage, you’ll receive this medication through your Part B benefit rather than your Part D plan.
Medicare Part B also covers medically necessary durable medical equipment, such as insulin pumps, wheelchairs, and glucose monitors. If you’re prescribed durable medical equipment that administers medications and Medicare Part B approves the device, then your prescription drugs for that device will also be covered under Part B. For example, insulin required for Part B-approved insulin pumps is covered under Part B rather than Part D.
These types of Part B prescription drugs are covered at 80%, leaving you responsible for 20%. However, if you have a Medigap plan, you may only be responsible for the Part B deductible.
Vaccine coverage can be tricky with Medicare. This is because some vaccines are covered under Part D while others are covered under Part B. Vaccines covered under Part B include but are not limited to the flu, pneumonia, and hepatitis B vaccines. Part D covers other vaccines, such as the shingles vaccine.
If the vaccine is covered under Part B, it’s generally covered at 100%. However, if it’s a Part D vaccine, you’ll pay your plan’s set copay or coinsurance for that vaccine.
Each year, during the Annual Election Period, you can enroll in a new Part D plan, so you are always enrolled in the most cost-effective plan for your prescription drug needs that year. Changes made during this period take effect on January 1st, and you’ll be locked in for the calendar year, so be sure to compare all plans thoroughly each year.