How Do Prescription Drug Plans Work?

Here is important information you need to know about owning a prescription drug plan:

Understanding the intricacies of prescription drug plans for seniors, especially Medicare Part D Prescription Drug Plans, is essential for making informed decisions about healthcare coverage. These plans, often referred to as Prescription Drug Insurance Plans, play a crucial role in ensuring affordable access to necessary medications for seniors.

• Annual Deductible — The annual deductible is a key aspect of Medicare Part D Prescription Drug Plans. While the deductible amount may vary, the maximum charge in 2019 is $415. Seniors pay a discounted price for medications until this deductible is met, signaling the beginning of the initial coverage phase.

• Initial Coverage — During the initial coverage phase, seniors encounter copayments based on the plan's formulary. Prescription drug plans categorize medications into tiers, each with a copay responsibility. These tiers commonly include generic drugs, preferred name brands, and more specialized medications. In 2019, the initial coverage cap is $3,820. Once this amount is reached, both the senior and the insurance company contribute, marking the transition into the coverage gap.

• The Coverage Gap – Despite entering the coverage gap, seniors continue to benefit from substantial discounts, especially for generic medications. During this phase, the cost-sharing model shifts, with seniors typically paying 25% for name-brand medications and 37% for generics. Gap spending continues until out-of-pocket expenses reach $5,100 in 2019.

• Catastrophic Coverage – If seniors surpass the coverage gap spending threshold, the plan activates catastrophic coverage. This phase sees the plan covering 95% of the costs for formulary medications for the remainder of the year, offering significant financial relief.