Understanding Medicare Prescription Drug Coverage

Pills scattered on the floor with a stethoscope

If you are a Medicare recipient, then you can receive numerous medical benefits that can substantially reduce your health care costs. However, one place where you might not realize that you lack certain benefits is for prescription drug costs. Certain Medicare plans do not automatically offer this coverage, so you might need to buy expanded prescription drug benefits. However, once you have these plans, you can receive substantial assistance with the costs of your critical medication.

Medicare prescription drug benefits come from a couple of different sources, and they often include a number of options that will influence what medications cost. Therefore, it’s imperative to work with your independent Medicare agent to determine the best way to get prescription drug benefits.

Where does Medicare prescription coverage come from?

Medicare is a multi-faceted program. Over the years, the original government-sponsored program has grown to include multiple private policy options that have expanded enrollees’ abilities to receive further protection. Most Medicare recipients receive their benefits from one of two avenues:

  • Original Medicare: This is the basic Medicare coverage supplied directly by the U.S. government program. It offers two types of coverage, Part A & Part B. Part A coverage provides hospital benefits and Part B provides benefits for most routine medical care.
  • Medicare Advantage Coverage: Also called Part C Medicare, Advantage plans are private plans provided by major insurers. By law, they must offer at least the same benefits of Original Medicare. However, they also offer a variety of medical benefits not supplied by Original Medicare.

Each of these options take different approaches to offering prescription drug coverage.

If you enroll in Original Medicare only, then you will not receive prescription drug coverage for most medications. Though very limited benefits are available in some cases the vast majority of prescription drugs will not have coverage.

To achieve this coverage you will have to buy the added benefit of a Medicare Part D prescription drug plan. Part D plans are private insurance plans supplied by major insurers. They offer a variety of benefits depending on which plan you choose.

Another avenue to getting overage is to buy a Medicare Advantage plan. Most, though not all, Part C plans offer prescription drug benefits as part of their additional coverage options. This is a separate plan from a Part D plan, and you cannot buy both a Part C plan and another Part D option.

How does prescription drug coverage work?

When you buy a Medicare prescription drug plan, either through Part C or Part D coverage, then you will have expansive benefits available for the cost of your routine prescription drug coverage. Given that prescription drugs are necessities for countless Americans, it’s much easier to pay for your coverage after you have these benefits in place.

Once you have a plan in place, you will present your coverage to your pharmacist when you fill a prescription. Your plan will the provide coverage for the drugs based on the terms set forth. Depending on the plan you choose, the amount of coverage you receive might vary.

All prescription drug plans (in Part C and Part D coverage) will include a formulary (a list) of the drugs that they will cover. This can include both generic and brand-name drugs. Most plans must offer at least two choices of drugs, though the prescriptions they choose to cover can vary.

To receive the full amount of coverage for the drug in question, you will have to take one of the drugs listed under your plan’s formulary. If you don’t, then you will have no coverage for the drug you want to take unless your doctor submits the appropriate pre-authorization paperwork to your plan’s provider.

What will my prescription cost?

Medicare prescription drug formularies are generally very expansive, and most of the time, they divide the drugs they cover into different tiers. Typically, there are four tiers, and the costs of the included drugs will vary by tier.

  • Tier 1 usually consists of generic drugs and offer the lowest copayment option for consumers.
  • Tier 2 drugs are often referred to as preferred brand-name drugs. These might be brand name drugs, but they are those for which you plan offers the most coverage (and usually the lowest costs).
  • Tier 3 drugs are non-preferred brand name drugs, and because they fall outside the Tier 2 preferred lists, they generally have a higher premium.
  • Tier 4 drugs are the most expensive, and usually are specialty drugs used in rare cases where another type of drug will not suffice.

If your provider feels that you can only benefit from a prescription in a higher tier, then there are ways to file an appeal through your plan to ask for the drug to receive coverage at a lower tier.

Never forget, all Medicare prescription plans will include different formulary and tier setups. As a result, you’ll need to ask your agent about the plan that is to your greatest benefit based on the drugs you take. Generally, the best time to enroll in your Part D or Advantage plan’s drug coverage is at the time you first become eligible for these benefits. Never hesitate to ask about this expanded benefit when that time arises.

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