Medicare Prescription Drug Plan (Part D) is used either as a stand-alone (Original Medicare with or without Medicare Supplement also known as Medigap), or as a part of Medicare Advantage with Prescription Drugs (MAPD). There are multiple Medicare Prescription Drug Plan changes in the Standard Benefit Plan for 2018. The Standard Benefit Plan is the prescription drug plan offering minimum allowable benefits.
Highlights of Medicare Prescription Drug Plan Changes 2018
There are four stages in the Medicare Prescription Drug Plan, also known as PDP. The PDP stages parameters will be changed in 2018. The updated numbers are provided below. For your convenience, the 2017 numbers are also provided.
1. Yearly Deductible
You pay the first $405 of drug costs before the plan starts to pay ($400 in 2017).
2. Initial Coverage
For each covered drug you pay a copayment/coinsurance defined by the plan, and the plan pays its share. The typical coinsurance is 25%, which means you pay 25% of the drug costs; the insurance company pays the rest. The initial coverage continues until the total drug costs (total of what you’ve paid and what the insurance company paid) reach $3,750 ($3,700 in 2017). You pay 25% of costs between $405 and $3,750 (between $400 and $3,700 in 2017).
3. Coverage Gap
Once the total costs of prescriptions paid by you and your plan have reached $3,750 ($3,700 in 2017), you will pay ALL drug costs until you’ve spent $5,000 true out-of-pocket costs (TrOOP) ($4,950 in 2017). This does not include monthly premiums (you must continue to pay them), but does include yearly deductible and coinsurance/copayments.
In 2018, during the Gap period you’ll pay for 35.0% of brand name drug undiscounted costs (40.0% in 2017) and 44% of generic drug costs (51% in 2017). Nevertheless, you can count the full price of the prescription towards the amount you are required to spend in order to qualify for catastrophic coverage.
4. Catastrophic Coverage
Once you’ve spent $5,000 out-of-pocket during the year for PDP ($4,950 in 2017), the coverage gap ends and catastrophic coverage begins. You will pay the greater of either a small 5% coinsurance (5% in 2017) or a small copayment of $3.35 for generic drugs ($3.30 in 2017) and $8.35 for brand name drugs ($8.25 in 2017) for each drug until the end of the calendar year.
Note. The dollar amounts above represent the MAXIMUM of allowed. Some plans may have numbers below the maximum.
Medicare Part D Enrollment
- 2018 Annual Enrollment Period (AEP) will start on October 15, 2017 and end on December 7, 2017. Don’t miss it!
- Your new coverage will begin on Jan. 1 of the next year.
- You may make more than one election during the AEP. Your final election will overwrite all previously made elections.
- You cannot change your PDP coverage after AEP, unless you are entitled to one of the Special Enrollment Periods (SEPs).
To find more about Part D Enrollment, see Medicare Enrollment Periods for Medicare Prescription Drug Plan (PDP).
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