PART D COSTS
What does part D cost?
Premium
This is the cost per month that your will pay just for the coverage, whether you use it or not. While prescription coverage is usually included in Part C plans, if you purchase a standalone Part D plan you will find plans with premiums between $7 and $100 per month. The national average in 2022 is $43.
IRMAA (Income Related Monthly Adjustment Amount)
Just as with Part B, some higher earners will pay more each month for Part D. This amount will be paid directly to the government rather than your Part D plan.
Deductible
First, your plan may have a deductible which is the amount you’ll pay out of pocket for some prescriptions before the plan starts to pay. The maximum deductible in 2022 is $480.
Initial Coverage
Once the deductible is met, you pay copays or coinsurance in the Initial Coverage stage. The amount is determined by which tier (1-5) each prescription is on. This stage ends when total retail cost of the drugs reaches a CMS-specified limit ($4,430 in 2022).
Coverage Gap
This stage, also referred to as the “donut hole”, is when you will pay 25% of the cost of prescriptions until your TrOOP (True Out Of Pocket cost) hits another CMS-specified limit ($7,050 in 2022). Some of that cost may be shared by manufacturer’s discounts.
Catastrophic Coverage
This final stage of Medicare drug coverage limits the amount of out of pocket spending for the remainder of the year once TrOOP reaches $7,050 (2022). At this point, costs will be limited to the greater of 5% of the retail cost of the medication OR $9.85 for a brand-name drug and $3.95 for a generic drug.
What about the donut hole?
Everyone loves donuts but when it comes to the Medicare Part D donut hole there is no love lost. The Coverage Gap (referred to as Donut Hole) is a stage of Part D coverage with a limit in place on the amount your drug plan will cover. In 2021, if you and your plan together have spent a total of $4,130 on covered prescriptions you will enter the coverage gap.
In this stage, you will pay about 25% of the cost for your brand-name prescriptions, while your plan and the manufacturer will pay 75%. Overall, what you and the manufacturer pay will help you get out of the coverage gap.
For generic prescriptions, you will pay 25% of the cost after Medicare pays 75%. In this case, however, only the 25% you pay will count toward the coverage gap.
