Prescription drug costs can be a significant problem for older adults. According to a 2019 report published by the CDC, more than 88% of adults 65+ take at least one prescription drug per month — and almost 42% take five or more prescription drugs monthly.
If you’ll be at least 65 before 2023, it’s worth looking into how Medicare Part D prescription drug coverage may save you money — especially if you are already taking multiple prescriptions.
Medicare Open Enrollment is October 15, 2021 to December 7, 2021 for those who are already at least 65. Those turning 65 later in 2021 (or in 2022) can take advantage of a special enrollment period.
Here’s what you need to know about Medicare and Medicare Part D open enrollment to ensure you’re prepared.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.
2022 Medicare Part D Changes
Specialty drug tier may lower costs
Many Medicare Part D plans place drugs on different “tiers” that determine what percentage patients pay in cost sharing. Patients typically pay 25% to 50% of the cost for drugs on the highest-priced specialty tier — and all drugs on the specialty tier have the same level of cost sharing.
But staring in 2022, Centers for Medicare & Medicaid Services will allow Medicare Part D plans to have a lower “preferred” specialty tier. This means plans can negotiate with drug makers to get better discounts on specialty tier drugs in exchange for being listed on the “preferred” tier. Plans can then pass the savings along to patients.
If you currently have one or more specialty tier prescriptions, you may want to look for plans that include your medication on a less expensive “preferred” specialty tier.
Changes to deductibles, copays, and the Donut Hole
Here are the annual updates to the standard Medicare Part D “Defined Standard Benefit,” including deductibles, Initial Coverage Limits (when you enter the Donut Hole), TrOOP (when you exit the Donut Hole), and Catastrophic Coverage copays.
1. The initial deductible will increase by $35 to $480 in 2022.
This means you’ll pay slightly more before Medicare Part D begins paying its share if you have a plan with the highest possible deductible. After you meet the deductible, you pay 25% of covered costs up to the initial coverage limit. Some plans may offer a $0 deductible for lower cost (Tier 1 and Tier 2) drugs.
2. The Initial Coverage Limit (ICL) will go up from $4,130 in 2021 to $4,430 in 2022.
This means you can purchase prescriptions worth $4,430 before entering what’s known as the Medicare Part D Donut Hole, which has historically 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’d think.
During the Donut Hole, you’ll 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.
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 your TrOOP.
The situation is different for generic drugs. You still pay 25% yourself, and your Medicare Part D plan covers the other 75%. However, only the 25% you pay yourself counts toward 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 your TrOOP.
3. The Medicare Part D total out-of-pocket threshold will bump up to $7,050 in 2022, a $500 increase from the previous year.
The true (or total) out-of-pocket (TrOOP) marks the point at which Medicare Part D Catastrophic Coverage begins. Under Catastrophic Coverage, you only pay a small copayment for covered drugs for the rest of the year.
4. Catastrophic Coverage copays will cost between $0.25 to $0.65 more in 2022 compared to the previous year.
You will now pay $9.85 for brand-name drugs and $3.95 for generics (or 5% of retail costs, whichever is higher).
Still have questions? Your pharmacist can help.