Medicare Part D Explained | 2023 Updates!

Alright, the Medicare numbers for

2023

are in, so it's time for us to update our Part D deep dive video where I'll describe how prescription drugs are covered under Part D plans. Now you can get a plan of Part D prescription drugs on its own as a stand-alone plan. which is most common for people who have a Medicare Supplement plan to fill in the gaps of original Medicare or you can get a Part D plan which usually comes bundled with a Medicare Advantage plan either way, here's how they will be covered your medications regardless of which option you choose, so I have to pull out my trusty donut template again this year, if you can't tell it's a donut with pink and blue sprinkles and it will help us explain how drug coverage works, make sure you Watch to the end where we will review alternatives like GoodRx and how it all works.

Now there are four phases of coverage based on how much you've paid during the year, so let's dive in and start with phase one, the deductible phase. Now the deductible phase will begin either the first one. month you enter Medicare or January 1 of each year, it will only be the first month you enter Medicare when you initially enroll that first year, so if you first entered Medicare on August 1, 2022, so August 1, 2022 is when your deductible phase starts and then this whole process that we're going to talk about will restart and start again on January 1,

2023

. Moving forward for the rest of your life, the coverage of Part D will restart and start again on January 1 of each year. now notice that in the deductible phase we haven't hit the donut yet, the donut is a symbol or a metaphor, if you will, of your

part

D plan coverage and since you haven't touched the donut yet, that means you are responsible for 100 of the cost of your medications until you meet your deductible and exit the deductible phase in 2023 the maximum deductible that insurance companies can charge is $505 there are plans with lower deductibles than this but most plans that we see have the 505 dollar deductible so you have a bucket here once you have put 505 dollars in this bucket you can move on to phase two, the initial coverage phase, the observant viewer who is there realizes that now we have arrived to the donut and that means your insurance company will start To help with your medication costs, you will still have some cost sharing in the form of copays and coinsurance.

The amount you will have to pay will depend on the tier your drug is in in your plan. Each plan has a list of drugs that the plan agrees to cover, called a formulary, that large list is then organized into tiers that generally group drugs by classification and cost, so this may be a little different depending on the company, but generally We see that tier one is preferred generic drugs and tier two is non-preferred generics. Tier 3 is preferred brand drugs, Tier 4 is non-preferred brand drugs, and Tier five is specialty drugs. You can expect that not only the cost of the medication itself will be higher the higher you go, but your responsibility for the costs will also tend to increase the higher you go. in tears, so a quick way to reduce your medication costs is to ask your doctor if a brand-name medication you're taking has a generic alternative.

Okay, so you're moving forward into the initial coverage phase, but you can move out of this phase and the way this happens is that if the dollars that you and your insurance company pay reach a certain limit in 2023, that dollar amount is four thousand six hundred and sixty dollars, so the dollars that you have paid in the form of deductible, all your co- pays all the coinsurance that you paid goes to this initial coverage group, in addition to that, it includes all the dollars that your insurance company has contributed to your medications and once all of this reaches four thousand six hundred and sixty dollars you will find yourself in the notorious donut hole, often called the coverage gap.

I think the pictures speak for themselves here, while in the coverage gap you are now responsible for 25% of the cost of your medications, you no longer have that simple co-pay you used to. This type of 25 coinsurance can significantly increase your cost responsibility. How do you get out of the coverage gap? Things get a little weird here, so you will have a group similar to the initial coverage group where there is a specific dollar amount that you have to reach and in 2023 that dollar amount is seven thousand four hundred dollars; however, the dollars contributing to that total are different than what we had before.

In the new Gap coverage group we include all the dollars you have paid on your deductible form, your co-payments, your coinsurance payments and the 25 for which you have been responsible while you were in the coverage gap; However, this group does not include dollars your insurance company has contributed; However, it does include discounts offered by drug manufacturers in this phase that equates to approximately 50 percent of the cost of the drug, so getting out of the coverage gap or coverage gap is not as simple as seven thousand four hundred dollars less four thousand six hundred and sixty dollars of initial coverage, the dollars you are contributing are higher, but once your out-of-pocket costs and manufacturer discounts add up to seven thousand four hundred dollars, you will be out of the coverage gap and on to the catastrophic coverage.

Now things are getting weird again, while under catastrophic coverage you will pay most of either five percent of the retail cost of your drug or four dollars and fifteen cents for a generic drug or ten dollars and thirty-five cents for a brand name drug, whichever of those dollar amounts is higher depending on the drug you're taking, that's what you pay so if you have a fifteen dollar generic drug, five percent of that is 75 cents, well, four dollars and fifteen cents is more, so you'll pay four dollars and fifteen cents if you have a five hundred dollar brand name drug, five percent of that is twenty-five. dollars, which is greater than 10.35, so you would pay twenty-five dollars.

This is where Part D is a little unsettling these days, there is no out-of-pocket maximum in the traditional sense where once you've paid a certain amount, your insurance company takes over. of the rest that doesn't happen here you are stuck in the catastrophic coverage phase paying these amounts until January 1 of next year this all starts again prescription drug costs are the highest healthcare spending category for millions of Americans there are policies being implemented to try to help with these costs, specifically a maximum out-of-pocket amount of two thousand dollars, but if that comes to fruition, it won't be implemented until 2025, so Part D prescription drug costs are a great topic to discuss with your agent now.

What about alternatives like GoodRx and others like it? These can be great options for you, and in our experience, GoodRx can save people money on certain medications, not all, but some, compared to their insurance plan, which is helpful for many people. There are three semi-negatives that you will need to weigh when considering using GoodRx number one, not all medications are less expensive so be sure to check all of your medications instead of just getting them all through GoodRx compared to your number two medication plan . GoodRx is not a Part D Plan and because of this, this means that the dollars you spend through GoodRx do not count towards your deposits that we have discussed, the dollars would not go towards your deductible, your initial coverage or your insurance deposit.

Gap coverage and that can limit how much your insurance plan can actually provide and help number three GoodRx sells your data for marketing purposes. Look, there are probably hundreds of companies that you and I are using right now that do the same thing. It's the world we live in, but we have some. customers who are not interested in the fact that this prescription drug app is selling their prescription drug information or data in general to Google Facebook marketing companies, drug manufacturers and insurance companies, so that's there for your consideration. Well, I think we covered that if This was helpful.

Would you consider liking and commenting on something that makes you happy? It would really help our channel. If you have any questions about Part D coverage, contact your agent if you don't have an agent. who specializes in Medicare in your life, we are always here to help you and you can contact me and our team here at this email address or visit 90days from pension.com. Hey, thanks for watching this far and for everything you personally contribute to the world, see you in other videos and have a great rest of your day.