How much does Medicare Part D cost?
The cost of Medicare Part D will vary depending on several factors, including which plan you purchase, which drugs you use and whether they are included in the plan’s formulary, whether the pharmacies you visit are part of the plan’s network, and so on. With most Part D plans, you will owe a monthly premium plus a yearly deductible and copayments or coinsurance on your prescriptions. Those with limited incomes may be able to get extra help with their Part D costs.
In most cases, you will have to pay a monthly premium for your Medicare Part D coverage in addition to any premiums you owe for your Part A and/or Part B coverage. Those who have both Part D and a Medigap plan will likely need to pay separate premiums for each, even if both plans are run by the same insurer. If you have a Medicare Advantage Plan with prescription drug coverage (commonly abbreviated as an MA-PD), the premium for your prescription coverage will typically be rolled into your overall premium for the plan. The size of the premiums you pay will vary from one plan to another, but the national base beneficiary premium for Part D in 2019 is $33.19. You can choose to have your Part D premium automatically deducted from your monthly social security payments – call your plan provider to arrange this. Note that it will usually take about three months for this to take effect, and the premiums for those three months may all be deducted at once before it changes to the typical one premium per month deduction. You can always contact your plan and switch back to being billed directly.
Late Enrollment Penalties
You do not have to enroll in Part D when you first sign up for Medicare, but this is generally the best time to do so, as enrolling late usually leads to penalties. Late enrollment penalties may be owed if, following the end of your Initial Enrollment Period for Medicare, you spend 63 or more consecutive days without Medicare Part D, a Medicare Advantage Plan, another Medicare plan offering prescription drug coverage, or other form of creditable prescription drug coverage. Like that for Original Medicare, the Part D late enrollment penalty will be applied to each premium for the duration of your Part D coverage and increases the longer you delay enrollment. This penalty is part of your premium and must be paid if you want to retain your coverage. However, there are some cases where a late enrollment penalty will not be owed – for example, if you had other creditable prescription drug coverage prior to getting Part D or if you get extra help with your Part D coverage. You will be told whether you owe a penalty after you have signed up for a plan.
Part D Income-Related Monthly Adjustment Amount (Part D-IRMAA)
While not something that most people will have to worry about, those whose modified adjusted gross income (MAGI) is above a certain amount will owe a Part D Income-Related Monthly Adjustment Amount, commonly referred to as a Part D-IRMAA, in addition to their other Part D costs. Unlike late enrollment penalties, this amount is not a formal part of your premium and is paid directly to Medicare rather than to your plan provider. The size of your Part D-IRMAA is determined using the MAGI reported on your tax return from two years previous and thus may vary from one year to the next. In 2019, if your income was $85,000 or less on an individual tax return or $170,000 or less on a joint tax return in 2017, you will only owe your plan’s base premium. Anything above that will be charged extra, up to $77.40 per month for those making $500,000 or more individually or $750,000 or more jointly. Part D-IRMAAs apply to both standalone Part D coverage and MA-PDs and must be paid if you wish to retain your coverage, even if your employer or a third party pays your premiums. In most cases, the cost will simply be deducted from your monthly Social Security benefit. You will be contacted by Social Security if your income is high enough to incur a Part D-IRMAA.
Deductibles, Copayments, and Coinsurance
While not included in all Part D plans, you will typically have to pay a yearly deductible for your coverage. This deductible must be paid before Medicare will cover its share of your prescriptions. The size of this deductible will vary between plans, though in 2019, no Medicare Part D plan is allowed to charge a deductible of more than $415. The amount that you pay for each prescription after your deductible has been paid will either be a copayment or coinsurance. Copayments have you pay a set amount for things – for example, for all drugs on a given tier – while coinsurance has you pay a set percentage of the cost of each item. Some plans will have different levels of copayments and coinsurance for different drugs and/or different tiers.
Who pays for Medicare Part D?