Medicare Part D is the plan you’ll get to cover your prescription drugs under Medicare. The cost of your plan, copays, and deductibles are dependent on the amount of income you received, based on your taxes from two years ago. This is true whether you’re getting insurance directly through Medicare, through an Advantage plan, or even if you get your insurance through an employer.
We’re created an infographic to help you understand how your costs change as your prescription costs each year accumulate.
Part A and Part B have their own premiums and rules. You can read a detailed explanation in our article How Much Does Medicare Cost in 2020?
What will I pay for my Medicare Part D Premium in 2020?
Medicare.gov has a handy chart that shows what your premium will be if you make over a certain threshold.
Note- you may want to sign up for Part D, even if you don’t need it yet. A Part D Late Enrollment Penalty could apply if you wait.
How much are Part D deductibles and coinsurance in 2020?
If you get a Part D prescription drug plan that’s not part of an Advantage plan, the deductible is $435 for 2020.
After you reach your deductible, you’ll pay your plans stated copay/coinsurance until you reach the coverage gap (donut hole).
What is a Coverage Gap?
Once your prescription drug costs have reached $4020 (including costs to you and you plan) you’ll enter the coverage gap. This has been referred to as the “Donut Hole” and is the gap between when your copay/coinsurance maxes out and catastrophic coverage. During this time you’ll pay up to 25% of your prescription costs, but some plans offer a lower copay during the coverage gap.
Prescription Drug Costs
Once you’re in the coverage gap, costs will be accumulating to get you out of the gap and into Catastrophic Coverage. The discounted price from the manufacturer of your drugs counts as out-of-pocket expenses instead of just the 25%. If the prescription charges a dispensing fee, only the 25% you pay counts towards your out-of-pocket spending.
Generic Drug Costs
You’ll still only pay 25% for generic drugs, but only the amount you pay counts toward out-of-pocket costs.
Once your out-of-pocket spending has accumulated to $6350, you’ll move into Catastrophic Coverage
What is the TrOOp?
You may hear the acronym TrOOP when discussing Medicare and Part D with people. It stands for True Out Of Pocket. It includes your deductible, coinsurance, copays, the 25% you pay in the coverage gap, and manufacturer’s discount amount in the coverage gap. It does not include your premiums.
What is Catastrophic Coverage?
There is also catastrophic coverage built into your Part D plan. Once you have spent $6350 in TrOOP costs, this catastrophic coverage begins. Afterwards, you’ll only pay 5% or a low copay (Brand Name- $8.95, and Generic- $3.60), whichever is higher.
If all of the options seem overwhelming, you’re not alone. At 417Medicare, we help people all over Springfield and Southwest Missouri choose their plans. Our services are free to you and you’ll leave understanding why your plan is the right one for you.