Part D

Prescription Drug Coverage

Medicare Part D is optional prescription drug coverage. It’s also called a Prescription Drug Plan, or PDP for short. You may also hear it referred to as stand-alone PDP, although Medicare Advantage plans known as MAPDs include Part D. Part D plans cover prescription medications not covered by original Medicare. Stand-alone PDP plans only cover prescription drug costs. Each Part D plan has its own formulary. If one of your medications is not in a Part D plan formulary, that plan may not work for you. Part D in itself can get very complicated. Let me do the research for you with no obligation.

Part D Late Enrollment Penalty

The late enrollment penalty is an amount that’s permanently added to your Medicare drug coverage (Part D) premium. You may owe a late enrollment penalty if at any time after your Initial Enrollment Period is over, there’s a period of 63 or more days in a row when you don’t have Medicare drug coverage or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Medicare drug coverage. If you get “Extra Help” You might not have to pay the late enrollment penalty if you get “Extra Help.” Enroll in a Part D plan within 2 months of getting Medicare Part A and/or enrolling in Part B to avoid an indefinite late penalty.

The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage. Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($33.37 in 2022) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium. The national base beneficiary premium may change each year, so your penalty amount may also change each year.

Initial Coverage Stage

In the Initial Coverage Stage, you (or others on your behalf) will pay a copay or coinsurance each time you fill a prescription, and the plan pays the rest. When your total drug costs—paid by you (or others on your behalf) and the plan—reach $4,430 you then move to the Coverage Gap Stage.

Coverage Gap Stage

During the Coverage Gap Stage, you (or others on your behalf) will pay no more than 25% of the total cost for generic drugs or 25% of the total cost for brand name drugs, for any drug tier until the total amount you (or others on your behalf) and the drug manufacturer have paid reaches $7,050 in year-to-date out-of-pocket costs.

Catastrophic Coverage Stage

You enter the Catastrophic Coverage Stage after $7,050 is reached (excluding premiums), you will have to pay only one of the following through the end of the year: $3.95 copay for generic drugs, $9.85 copay for brand name drugs or a 5% coinsurance, whichever is greater.

Extra Help with Part D for medicines

In 2006, Medicare began providing prescription drug coverage called Medicare Part D. Medicare also provides extra help with the cost of prescription drugs for those who qualify. This is known as the Low-Income Subsidy (LIS) program.

Benefits the Low-Income Subsidy (LIS) Program

The Low-Income Subsidy (LIS) program helps pay for a portion of Part D prescription drug plan costs, including Part D premiumsdeductibles and copayments. Depending on your income and assets, you may qualify for the full subsidy or a partial subsidy. All beneficiaries who qualify for the LIS program are permitted to change Part D plans once a quarter for the first 3 quarters with an effective date of change being the first of the following month. In addition, one change can be made in the last quarter of the year, with the effective date being January 1. Beneficiaries who have been identified as “at risk” for opioid abuse, may be further restricted from changing plans.

Eligibility for Extra Help/LIS

You are automatically enrolled in a drug plan with the Extra Help/Low-Income Subsidy (LIS) program for 2022 if you qualify for Medi-Cal or a certain type of Medicare Savings Program (Qualified Medicare Beneficiary, Specified Low-Income Medicare Beneficiary or Qualified Individual program). The chart below explains what you will pay for your Part D coverage depending on the Medi-Cal and/or Medicare Savings Program (MSP) program for which you qualify, assuming you are enrolled in a benchmark plan.