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Understanding Medicare Part D Plans

One of the most confusing aspects of Medicare is prescription drug coverage, or Medicare Part D. Whether you're considering Medicare Advantage plans with a prescription drug component or a stand-alone Medicare Part D plan to go with Original Medicare, it's important that you understand how Medicare Part D works.

What is Medicare Part D?

Medicare Part D is prescription drug coverage. You can get Part D coverage through a Medicare Advantage plan or a stand-alone Part D plan.

How does Medicare Part D work?

The way Medicare drug coverage is structured, you'll pay a portion of your drug expenses and your plan will pay the rest, up to a certain point ($2,850 in 2014).

Medicare Part D PlansAfter the initial coverage limit is reached, the coverage gap, also known as the donut hole, begins. Historically, people reaching the donut hole have had to pay 100 percent of the cost of their prescriptions until they reached what Medicare calls catastrophic coverage. In 2014, when you're in the donut hole you'll get a 52.5 percent discount on brand-name and a 28 percent discount on generic drugs until you reach catastrophic coverage. Catastrophic coverage is reached when your out-of-pocket costs for the year total $4,550.

After you've reached catastrophic coverage, your plan will start covering a portion of your drug expenses once more - this time covering a much larger percentage of the cost (95 percent). Once you reach catastrophic coverage, the donut hole ends for the rest of the year, but you start all over again with each new year.

How do I choose Medicare Part D plan coverage?

Not all Medicare plans are created equal. There are several things you should look for when selecting a Medicare plan that includes prescription drug coverage, whether that coverage is offered by a Medicare Advantage plan or a Medicare Part D plan:

  1. Are my drugs covered?
  2. Does the plan include restrictions that could prevent me from getting my prescriptions when I need them?
  3. What will my annual prescription drug costs look like?

Allsup Medicare Advisor can help you answer all these questions and more. For more information on how we can help you navigate Medicare, call us at (866) 521-7655.