Medicare provides vital prescription drug coverage. But understanding how you’ll pay, how much you’ll pay, and how you’ll receive your benefits is tricky. It gets very complicated, very quickly.

To make it easier to grasp, let’s break up Part D coverage into four different phases.

How Part D Works

Part D is an optional plan to add to your Original Medicare plan or may be included in your Medicare Advantage plan. Every time you need a prescription while on a plan, expect three things:

  1. Your premium: This is a monthly payment you must keep up with to keep your coverage active. The exact amount will vary plan-to-plan and maybe next to nothing depending on the plan. It is not included in the 4 phases of Part D coverage.
  2. Your deductible: Described in detail in the following section.
  3. Your copayment/coinsurance: These are “cost-sharing” fees, in which Medicare pays a portion of the costs, then you pay your share. It is relative to the drug itself but varies anywhere from $1 to 30% of the total cost.

Phase 1: The Deductible

The first phase of Part D is your deductible. This is a yearly fee you must pay before receiving coverage within a benefit period (i.e., 12 months). You must make this payment before you receive any Part D benefits for that year.

Phase 2: Your Planned Coverage

Planned coverage is the second phase of Part D. While many refer to it as initial coverage, planned coverage is a more accurate name. Because this is the set amount of costs you agree to cost-share, it is the coverage you “plan” to pay for. Cost-sharing, described above, is a small fee, i.e., your agreed portion of the drug price.

Phase 3: The “Donut Hole”

What happens, however, when you reach the planned coverage limit? You then enter the Part D “donut hole,” or phase 3, the coverage gap. For most plans, you hit this limit of around $4,130 spent by both you and the plan collectively on prescriptions. During this gap, you are responsible for 25% of the cost of your drugs.

Phase 4: Catastrophic Coverage

How do you exit the gap? Typically, when around $6,550 is collectively spent (not including premiums) by both you and the plan. You will then enter the final 4th phase of Part D, known as catastrophic coverage. During this phase, you’ll pay significantly less than any of the previous phases–typically only about 5% of the total cost of a drug, and continue to do so till the benefit period ends at the end of that year.

Get Insight into Your Medicare with Game Changing Benefits

Our focus is you–we do what it takes for our customers to understand their coverage and get the protection they need to feel secure. To learn more about Medicare Part D, call Game Changing Benefits at 972-331-1060​.