Prescription Drug Plans (PDP Plans)
Part D as it is known in Medicare terminology is offered by private insurance companies and covers MOST drugs by the FDA (Federal Drug Administration). The important terminology which a customer should know are listed below. Part D plans can be very confusing; however if you understand this terminology, It makes the process of understanding your Part D much easier.
Formulary: The formulary is a list of drugs covered by the policy. Not all policies cover the same drugs so it is important to make sure the various medicines you need are covered under your policy.
Tiers: In addition, not all drugs cost the same. They are broken into 5 tiers. Drugs in the lower Tiers tend to be cheaper while Tier 5 drugs are the most expensive.
Generic vs. Brand: When a drug is first developed and approved (Brand Drug), it is covered by a patent which allows the company to charge more for that drug. They are given this coverage so that they can make back the cost to develop the drug and get the drug approved. Once the patent for the drug expires, The drug becomes a Generic Drug and can be produced and distributed by multiple drug companies. This normally brings down the cost of the drug exponentially. As such, you will see Generic Drugs categorized as Tier 1 or Tier 2 drugs and Brand Drugs tend to be Tier 3-5.
Other Terms to be aware of when considering a Part D plan are as follows:
Step Therapy: This is when a company will require you to use a similar drug to the prescribed drug. If the use of the similar drug does not work, then the insurance company will allow you to use the prescribed drug which may not have been in the formulary.
Coverage Gap: A period of time in which you pay higher cost sharing for prescription drugs until you spend enough to qualify for catastrophic coverage. The coverage gap (also called the “donut hole”) starts when you and your plan have paid a set dollar amount for prescription drugs during that year.
Catastrophic Coverage: Once you’ve spent $6,550 out-of-pocket in 2021, you’re out of the coverage gap. Once you get out of the coverage gap (Medicare prescription drug coverage), you automatically get “catastrophic coverage.” It assures you only pay a small coinsurance percentage or copayment for covered drugs for the rest of the year.
Still Have questions? Please feel free to call or set an appointment with me below. My job is to educate you so that you can choose the best plan for your medical needs.
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