How do Part D costs work?

igdmaster's picture

Your costs for a Part D prescription drug plan include monthly premiums, copays, and possibly a deductible.  Each plan has a monthly premium which is usually paid out of your Social Security benefit.  If you are not receiving your Social Security benefit, you will be billed on a quarterly basis.  Depending on your income, you may be subject to an Income Related Monthly Adjust Amount (IRMAA).
Your cost for prescription drugs purchased at a pharmacy are determined by four stages of payment, known as Deductible, Initial Coverage, Coverage Gap and Catastrophic Coverage.  Part D prescription drug plans may or may not impose a deductible.  You are responsible to pay the full cost of prescriptions until you have satisfied the deductible.  After the deductible is satisfied, you pass into the Initial Coverage stage, where the plan pays a portion of your prescription costs and you pay copays based on the tier assigned to your drug.  If the retail cost of your prescriptions passes a certain threshold, you will reach the Coverage Gap, where you pay 25% of brand name drugs and 25% of generic drugs.  After passing another threshold, you reach the Catastrophic Coverage stage where you are responsible for only a small coinsurance (5%) or a flat copay.