Medicare Part D Premium is time sensitive and may include penalties
Medicare Part D (Prescription Drug Coverage), is your drug coverage. Since, there is no Federal insurance program for Prescription Drug Coverage it is provided by private insurance carriers only. There is a Federal drug formulary that all of the carriers must at least follow. However, each carrier has their own drug formulary that they set every year. So, a private insurance carriers drug formulary may make changes each year, but will at least provide coverage that the Federal drug formulary sets.
Medicare Part D Plans will help pay for your Prescription Drugs and protect you from high prescription drug costs. Every plan has its own list of covered medications, called a formulary. It is important to choose a plan based on the prescriptions you take and the plans formulary of covered drugs. Before enrolling in a Prescription Drug Plan, you should review each Medicare Part D plan formulary to evaluate if your drugs will be covered and the copay associated with each of your prescriptions. The drugs you take may not be covered under every Prescription Drug Plan, or may be on a higher tier than the other plan's formulary marks it as, which can result in significantly increased Out-of-Pocket costs.
The cost of Medicare Part D (Prescription Drug Coverage) has a lot of factors that go into the overall "cost." Some things to understand when considering the total cost of a Prescription Drug Plan: Monthly Premiums, the impact of your income on premiums, cost-sharing, and the donut hole coverage gap.
Every plan requires a monthly payment or premium, for the Prescription Drug Coverage itself. Since, every insurance carrier sets their own formulary, the monthly premiums vary by insurer and plan, these premiums can range significantly.
Your income may also impact the premium you pay. People whose income exceeds certain thresholds pay more for Medicare Part D plans. The extra premium amount is called the Income Monthly Adjusted Amount (IRMAA) and is determined by Federal tax returns. Those who are low-income or have limited resources may qualify for Medicare Part D extra help. This Low Income Subsidy may cover part of all of the Part D monthly premium. If, you qualify for Low Income Subsidy known as Extra Help your plan premium may be reduced or fully covered and your Prescription Drug copays will be capped at preset amounts.
In addition to a monthly premium for your Prescription Drug Plan, you will also be responsible for sharing some of the drug costs until you reach the limit on Out-of-Pocket costs for the year. These cost-sharing comes in the form of copays, co-insurance, and your plan deductible (if you have one). Deductibles can vary by plan, some plans apply all drug tiers to the deductible and others will only apply to the deductible only to higher tiers for brand name drugs.
After, you meet the Annual Out-of-Pocket limits, you have reached the coverage gap known as the Medicare Part D, Donut hole. At this stage you will be responsible for 25% of the costs for generic and brand name drugs until your Out-of-Pocket costs reach $6,550. Once, that amount is reached you are in the Catastrophic Coverage stage, which requires a small copay or coinsurance amount for the remainder of the year. However, if you qualify for the Medicare Part D Extra Help, the Medicare Part D Donut hole does not apply to you. Extra Help can significantly reduce the costs of prescription drug copays during all phases of drug coverage.