Prescription Drug Plans – Medicare Part D

Original Medicare, nor Medicare Supplements, cover prescription medications.  Because medications are more widely used and can be expensive, CMS (Centers for Medicare and Medicaid) made a new Part of Medicare in 2006 called Medicare Part D.  However, you can not get a Part D plan directly from the government like you can for Part A and Part B.  These plans are contracted out to private health insurance companies.  Enrollment has to be directly with the company or through an authorized agent.  CMS feels so strongly that every Medicare recipient should have one – even if you do not have any prescriptions -, that they impose a late enrollment penalty (LEP) if you do not have creditable prescription coverage or are not enrolled in an approved plan.

Getting the right plan for you is super important.  In 2020 there are 28 different plans available in Virginia.  In a way, they are all the same because they have a government contract.  However, they vary significantly because the contract has lots of moving parts.  They vary by:

  • Premium – the cost of the plan
  • Deductible – the amount you have to pay before the plan kicks in.
  • Formulary – Which specific medication is covered. The Plans only have to have two medications for the same condition.  They may refuse to pay for a drug that is not on their list.
  • Tiers – Some plans may charge a $30/mo co-pay for a month’s supply and another company may charge you a $40 co-pay for the exact same medication. Some may have free generic meds while others could be put on a Tier where you pay 44 percent of the cost.
  • Donut hole – too complicated to explain in a short synapsis.
  • Preferred Pharmacies - Insurance companies partner with specific pharmacies.  You generally can use almost any pharmacy you want, but you may save significant co-pay amounts by using a specific pharmacy.

Because of all these variables, you could overpay by hundreds and thousands of dollars if you choose the wrong one. 


Prescription Drug Plans (PDP’s) do not pay for all the medication costs.  On average, the Medicare beneficiary has to pay approximately 25 percent of the retail cost of the meds in the forms of co-payments when the prescription is picked up at the pharmacy or mail ordered.


One major problem is that the government and insurance companies renegotiate the contracts every year.  That means the plan you have and like in 2020 can be not at all suitable for 2021.  I recommend that they be “shopped” every year during Annual Election Period (AEP).  The October 15th. – December 7th. of each year is time to decide which plan is best for starting the following January 1st.

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