Finding Value in Medicare Part D Plans

Persons who enroll in a Medicare Supplemental plan and wish to have prescription coverage, must also enroll in a separate stand-alone Medicare Part D Plan.  Part D is simply a Medicare term for private insurance companies’ authorized Medicare prescription insurance coverage plans.

For 2025, PA residents have access to 14 possible Part D plans; NJ residents have access to 11 plans.  To understand which of these plans might be right for you, a prescription review is suggested.  Choosing a wrong fit plan can easily cost you several hundred dollars or more annually in wasteful spending.

Q: How do co-pays on Medicare Prescription Drug Plans Work?

Each Part D plan has a different monthly insurance premium price and a distinct formulary – a list of covered prescriptions. Prescriptions listed in the formularies are then assigned a Tier level (copay level): Tier 1, Tier 2, Tier3, Tier 4, and Tier 5.  With most plans, Tier 1 and Tier 2 will consist of generic drugs. Tiers 3, 4, and 5 tend to be name-brand drugs, but these tiers will also include some expensive generic drugs considered “non-preferred.”  Each tier then has a fixed copay per fill or sometimes a percentage coinsurance due per fill (percent of the retail price you will pay).

Medicare Part D prescriptions drug plans are generally divided into three co-payment sections:

1. Deductible Phase;
2. Initial Coverage Phase;
3. Catastrophic Phase.

Q: How does the Deductible Phase work?

Most Part D plans (but not all plans) will have a calendar-year deductible, generally applicable to name-brand drugs and non-preferred drugs. This deductible is often (but not always) $590.

For most plans, this means that if you have a prescription for a name-brand drug or a non-preferred drug, then you pay the cash retail price for the first $590 as you fill.  Ouch!  But once you’ve met that $590 deductible, you then will have fixed copays or percentage coinsurances in the Initial Coverage Phase.  For most plans, generic drugs are usually not subject to the deductible.

But…life is full of exceptions to the rule, so why not Part D plans, too? Some Part D plans don’t have any deductible, but with these plans, we may find the monthly cost of the insurance is too high. Other Part D plans have a deductible less than $590, but maybe the copays are too high.

Q: How does the Initial Coverage Phase work?

A: The Initial Coverage Phase of a Medicare Part D Prescription coverage consists of a series of co-payments or coinsurances (percentage of retail cost) due per prescription. The co-payments vary based on the prescription’s tier level (described above) — whether the prescription is considered a generic; a favored-brand name prescription;  or a name-brand, but higher priced prescription, etc.  Remember that many plans will also have a Deductible Phase, also described above.

You will pay copayments or percentage of retail price coinsurances per prescription drug, based on the prescription drug tier.. You will be protected by a $2,000 Year 2025 out-of-pocket copay maximum.  if the deductible you paid, plus all copays, reaches $2,000 in 2025, then you will face no more charge for all plan coved drugs.

Q:  Is this system overly complicated?

A: Yes… but we work with Medicare plans full-time and our job is to navigate this for your specific needs.  There are no charges to you for our services, nor any extra charges to you from the Part D plans because you are working with a broker.

For all our clients, we will  work to help you establish your Medicare portal at www.medicare.gov. Takes five minutes to set up. Here we will ask you to enter your prescriptions in a software program there. The program will remember your prescriptions in coming years, making any end-of-year analysis very easy to do.

Call Us to Discuss Medicare Part D:  Toll-Free 888-959-1335

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