If you’re 65 or older, make sure Medicare Open Enrollment is on your calendar. It is an important time of year to review your current medical coverage and healthcare needs, and select the most appropriate Medicare plan for the new year.
Even if you’re already enrolled in Medicare, it’s still a good idea to review your plan, considering that coverage and your health needs may change from year to year. If you will become eligible for Medicare coverage for the first time in 2021, now is a good time to start learning about the different types of Medicare (i.e., Medicare Parts A, B, C, and D) and what they mean for you.
The open enrollment period for Medicare 2021 begins on October 15, 2020, and ends on December 7, 2020. Here’s what you need to know about Medicare to ensure you’re prepared, especially for Medicare Part D open enrollment.Back to top
What are the different types of Medicare?
Medicare is an insurance plan provided by the federal government and overseen by the Centers for Medicare and Medicaid Services (CMS). Medicare coverage is divided into four general sections, each of which covers different services. You must be enrolled in Parts A and B to be eligible for Part D.
Medicare Part A covers hospital expenses (i.e., pays for costs if you are hospitalized or placed in a nursing home). Medicare Part B covers outpatient services such as doctor’s visits, labs, immunizations, X-rays, and surgeries that don’t require you to stay overnight in a hospital.
Medicare Part C, also known as Medicare Advantage, is a type of Medicare coverage offered by private insurance companies who contract with CMS. It is available to anyone enrolled in Medicare Parts A and B. Medicare Advantage plans cover not only the services provided by Parts A and B, but also may offer dental, vision, and/or prescription drug coverage.
Medicare Part D is a supplemental form of Medicare that specifically covers prescription drug services. If you are enrolled in Parts A and B, you can enroll in a Part D plan for prescription coverage.Back to top
Why would you want to get Medicare Part D?
Medicare Part A only covers medications that you receive while you are in a hospital or a skilled nursing facility. Medicare Part B only covers a limited number of medications and typically only if they are administered in an outpatient setting (such as a doctor’s office or clinic). Examples include vaccines, injectable medications, and medications administered via IV.
This lack of regular prescription coverage can be a significant problem for older adults. According to a 2018 report published by the CDC, more than 87% of adults ages 65+ take at least one prescription drug per month, and almost 40% take five or more prescription drugs monthly. If you’re 65 or older, it’s worth looking into how signing up for Medicare Part D coverage may save you money, especially if you already are taking multiple prescriptions.Back to top
Who qualifies for Medicare Part D?
Anyone who is eligible for Medicare coverage is also eligible for Medicare Part D. Generally, you will qualify for Medicare if you are age 65 or older. People who are about to turn 65 can apply for Medicare outside of the regular open enrollment period during their 65th birthday month, as well as the three months before and after (although coverage does not start until you turn 65).
If you are under 65, you also may qualify under special circumstances, e.g., if you’re disabled (and have been receiving disability checks from Social Security Disability Insurance for at least 24 months), have end-stage renal disease, or have ALS (i.e., Lou Gehrig’s disease).
So, where can you sign up for it?
Once you are enrolled in Medicare Parts A and B, you can sign up for Medicare Part D coverage on the Medicare Plan Finder page. You can review and select health plans after entering your ZIP code and answering a series of questions. If you already are enrolled in a Medicare Part D plan, your plan automatically will renew, so technically, you’ll only need to visit the website if you want to change plans. However, it’s still a good idea to review your plan every year in case your current plan has changed or to see whether a different plan would better fit your current needs.
How much does it cost?
The Medicare Plan Finder page will give you pricing information. You will be prompted to type in your list of medications and select your preferred pharmacy. The website then will provide a list of plans from which you can choose. The cost of your Medicare Part D plan may vary based on the plan you select and where you live. You’ll want to compare plan costs and co-pays to determine which plan will work best for you.
2021 Medicare Part D Changes
No significant changes have been made to Medicare Part D for this year. The biggest changes include a reduction in insulin costs and slight rises in deductibles and co-pays. Here is a breakdown of the numbers.
Reduced insulin costs
One of the big changes to Medicare Part D for 2021 is what diabetics may pay for insulin. Patients who are part of a participating Medicare Part D plan will pay only $35 out-of-pocket for a 30-day supply of insulin.
The Centers for Medicare and Medicaid Services (CMS) estimate that those who need insulin should save an average of $446 in out-of-pocket costs for insulin for the year. If you are a diabetic who requires insulin, it’s worth shopping around for an enhanced Medicare Part D plan that is participating in this new, voluntary insulin pricing scheme.
Changes to deductibles, co-pays, and the donut hole
In addition, annual updates have been made to the standard Medicare Part D deductible, initial coverage limits (when you enter the donut hole), true out-of-pocket (TrOOP – when you exit the donut hole), and catastrophic-coverage co-pays.
Here are the updated numbers for 2021:
The initial deductible will increase by $10 to $445 in 2021.
If you have a plan with a standard initial deductible, you’ll pay slightly more before Medicare Part D begins to pay its share. After the deductible is met, you’ll pay 25% of covered costs up to the initial coverage limit. Some plans may offer a $0 deductible.
The initial coverage limit (ICL) will rise from $4,020 in 2020 to $4,130 in 2021.
This means you can purchase prescriptions worth $4,130 before entering what’s known as the Medicare Part D donut hole, which historically has been a gap in coverage.
Thanks to cost sharing with your Medicare Part D plan and the drug manufacturers, being in the donut hole isn’t nearly as expensive as it used to be, and exiting it may be easier than you might think.
While in the donut hole, you will pay 25% for brand name drugs. The manufacturer will give you a 70% discount during this time, and your Medicare Part D plan will pick up the remaining 5%.
The 25% you pay, plus the 70% discount from the manufacturer, will count toward your combined TrOOP (see below), which is when you exit the donut hole.
So, for example, if your brand-name drug costs $100, you would pay $25, your Medicare Part D plan would pay $5, and you’d get a $70 discount from the manufacturer. A total of $95 would count toward meeting your TrOOP.
The situation is somewhat different for generic drugs. You still pay 25% yourself, and your Medicare Part D plan covers the remaining 75%. However, only that 25% that you pay yourself counts toward meeting your TrOOP.
If your generic drug costs $100, you would pay $25, your Medicare Part D plan would pay $75, and a total of $25 would count toward meeting your TrOOP.
The Medicare Part D total out-of-pocket threshold will bump up to $6,550 in 2021, a $200 increase from the previous year.
The true out-of-pocket (TrOOP) marks the point at which Medicare Part D Catastrophic Coverage begins, under which you only pay a small coinsurance amount or co-payment for covered drugs for the rest of the year.
Catastrophic coverage co-pays will cost between $.10 and $.25 more in 2021 compared with the previous year.
Beneficiaries will pay $3.70 for generic drugs and $9.20 for brand-name drugs, up from $3.60 and $8.95, respectively.
To understand more about Medicare Part D changes for 2021 and what they mean for you, talk to a pharmacist at your local Good Neighbor Pharmacy.