What You Can Expect When it Comes to Medicare Part D Coverage

Say Goodbye to the Donut Hole

The year 2020 will prove to be a year of major change for Medicare plans, particularly for Medicare Part D structure.  A central piece of Obama Care legislation was to close the dreaded coverage gap known as the donut hole. After the passage of the Affordable Care Act, the donut hole was scheduled to be incrementally phased out beginning in 2011 with complete elimination by January 1st, 2020.  This means you will finally have peace of mind knowing your prescriptions will not increase in cost once you cross over the initial coverage level.

Part D has a four-tiered structure: Deductible, initial coverage level, coverage gap (donut hole), and catastrophic coverage level. 

Part D 2020 Deductible

For 2020 the deductible amount has been increased to 435.00 annually.  This higher deductible amount will definitely bite for those with high name brand medications because there is no cost-sharing through this 435 dollar threshold. This means you will need to pay 100% of what Medicare approves for the medication until this deductible is met.  There is good news for seniors who only take Tier I or Tier II generic medications. Most plans will waive this deductible for these generic drugs making them much less expensive and in some cases free of charge through the deductible amount.

Exceeding Your Deductible

If your drug costs exceed the 435 dollar deductible you then move into the Initial Coverage Level under part D.  This level carries you from 436 dollars all the way up to 4020 dollars annually. In this level, you will be required to pay a maximum of 25% of the cost of your medications through 4020 annually.  It’s important to note your drugs could cost much less than this 25% but not to exceed 25%. 

Exceeding Your Annual Thresholds

Once the member exceeds the 4020 annual thresholds for medications, the member enters into the coverage gap level for the year.  In the past, this posed a big problem for seniors on a fixed income as their medications usually more than doubled in price. Beginning next year this will not be the case.  The coverage gap level will be the same as the initial coverage level and you pay no more than 25% of the cost of the medications. Throughout the gap level coverage, the drug manufacturers have negotiated a 70% discount on the medications.  You are not responsible for any of this amount. However, this discount will be credited toward your 6350 annual spending limit in the gap.

Catastrophic Level Coverage

Any amounts in excess of the 6350 fall under the final stage of the Medicare Part D known as the Catastrophic Level.  Fortunately for seniors with exorbitant medication expenses, this level greatly reduces amounts owed for name brand and generic medications alike.  You pay the greater of 5% of the cost of the medication or $8.95 brand/ $3.60 generic co-pays up to a yearly maximum of 9719.38. This amount is inclusive of enrollee premiums, co-pays, co-insurance, and manufacturer discounts.  It is important to note these threshold and co-payment amounts are updated annually and indexed for inflation. 

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