Skip to main content

Sound Advice: November 3, 2021

Medicare 201 

Coverage of outpatient prescription drugs under Medicare Part D began on January 1, 2006.  Part D is an optional plan that is available to everyone enrolled in Medicare Part A and Part B.  There are numerous plans available and there are considerable differences in ongoing plan prices as well as drug costs.

Let’s begin with some basics.  One of the most important is the formulary, the list of prescription drugs (both name brand and generic) preferred by the health plan.  There are copays for those that are on the list.  For drugs not on the list, the patient may have to pay full price.  Formularies change annually and drugs that have been included in the formulary may switch from preferred to nonpreferred or be removed entirely.

Within the formulary there are different tiers for the drugs included.  Tier 1 is generic drugs, which have the lowest possible copayment.  Tier 2 includes brand-name drugs that do not have a generic option.  Tier 3 consists of nonpreferred, brand-name drugs that do have a generic option. Tier 4 includes nonpreferred brand-name drugs and some nonpreferred, high-cost generic drugs.  With Part D coverage, the copayment costs can range from just a few dollars to fairly hefty sums. 

In addition, there are preferred pharmacies.  A preferred pharmacy network is a group of pharmacies willing to give the plans a larger discount than those offered by other pharmacies.

That leads us to the next issue: the stages of coverage.

Stage 1 of Part D is when you pay the full cost of prescriptions until you meet the annual deductible, which may be as little as zero or much higher, depending on the plan selected. 

Stage 2 of Part D is when the plan pays for a portion of the prescription drug you purchase, as long as the drug is covered under the plan’s formulary.  The copay is determined by the tier level assigned to the drug.  This stage ends when the amount spent by you and your plan adds up to the coverage limit set by Medicare for that year.  The limit for 2022 is $4,430.

Stage 3 of Part D is known as the coverage gap (a.k.a., the donut hole) for those whose spending on prescription drugs has exceeded the Stage 2 limit.  When in Stage 3, participants will pay 25% of the plan’s cost for covered brand-name and generic drugs.  Stage 3 ends when the total spending for covered drugs reaches $7,050.  This number is the total of copays, yearly deductible, and what has been paid for drugs in the coverage gap.

Stage 4 of Part D is known as catastrophic coverage.  In this stage, the plan and the government pay for about 95% of the cost.  Participants in Stage 4 remain in this stage until the end of the coverage year. 

For more details, go to medicare.gov.

N. Russell Wayne, CFP®

Sound Asset Management Inc.

Weston, CT  06883

203-222-9370

www.soundasset.com

www.soundasset.blogspot.com

Any questions?  Please contact me at nrwayne@soundasset.com

Comments

Post a Comment

Popular posts from this blog

Sound Advice: July 8, 2020

Jobs Are Up, But So Are New Infections Through the spring months, m ost of the economic data was extremely negative, with record declines in employment and consumer spending.  The speed of that decline had no modern precedent. We are now in a recession.   The shortest recession on record occurred in 1980 and lasted just six months.  Second place goes to a seven-month recession in 1918-19, which was tied to the Spanish flu pandemic.  The big question is: When will this recession end? Given surprisingly strong data in May, April may have been the bottom of this economic cycle.  If so, it will have been the shortest recession on record.  With massive support from the Federal Reserve, the federal government, and the reopening of previously closed businesses, employment surged unexpectedly.  At the same time, pent-up demand, stimulus checks, and generous unemployment benefits led to a reacceleration of commercial activity. Still, not all is rosy.   In his recent testimo
Post a Comment
Read more

Sound Advice: December 13, 2023

What You Need To Know About Long-Term Care Insurance Long-term care insurance (LTCI) is a type of insurance that helps cover the costs of long-term care services, such as assistance with activities of daily living (ADLs) such as bathing, dressing, and eating. It can also cover the expenses associated with care in a nursing home, assisted living facility or at home by a professional caregiver. Here's what you need to know about long-term care insurance: 1. Not Covered by Health Insurance or Medicare: Long-term care services are generally not covered by health insurance or Medicare, which only provide limited coverage for skilled nursing care and rehabilitative services. Medicaid covers long-term care, but you need to meet strict income and asset requirements. 2. Costs of Long-Term Care: Long-term care can be expensive and can quickly deplete your savings. LTCI helps to cover these costs, providing financial security and ens
Post a Comment
Read more

Sound Advice: May 17, 2023

Say hello to PEG No, she’s not a new neighbor.   PEG is the acronym for Price-to-Earnings Growth Ratio.   Although stock analysts tend to litter their conversations with shop talk such as PE (Price-Earnings Ratio), ROI (Return on Investment), and Debt-to-Equity Ratio, PEG may well be more telling about the level of stock valuations. The process of evaluating stocks begins with evaluations of the underlying companies.   This includes income statements (a.k.a., profit and loss statements) and balance sheets. Concerns about income statements focus on the trends in earnings, which include profit margins, tax rates, and net income.   What’s important here are the trends over time.   Are margins rising or at least holding their own? Are tax rates following a consistent pattern or have there been interim aberrations? And is the bottom line expanding? Flat or rising margins are good.   Level tax rates are also OK, but if there’s been an outlier, what would have been the impact on net i
Post a Comment
Read more