More than 31 million Americans use Medicare Part D, America’s national prescription drug plan, to cut down on medication costs. The program promises some relief from heavy medical bills, but there is a good deal of fine print to sort through. Below is a guide to understanding prescription drug coverage:
As we discussed in Part 1, Medicare is broken up into four main parts:
Medicare Part A, for hospital stays, Medicare Part B, for outpatient services, doctor visits and treatments, Medicare Part C for plans through a single medical provider (such as a Health Maintenance Organization, or HMO), Medicare Part D for prescription drugs. After you enroll in Medicare Part D, you will receive a Medicare card in the mail. You present this card at your local pharmacy just like you would with any insurance card. Medicare Part D requires you to pay a premium (monthly fee for service), a deductible (an amount that you must pay before coverage begins), as well as co-pays (partial payments paid at your pharmacy) for each prescription you get filled. You pay a portion of each bill at the register and Medicare covers the rest.
Enrollment for Medicare Part D is from November 15 to December 31 each year. To enroll for Medicare, you need to call Social Security (yes, you call Social Security to enroll in Medicare. A tad confusing…) at (800) 772-1213. Or you can contact a Medicare office for resources in your area.
How much does it cost to join Medicare Part D? It depends on where you live, what types of medications you take, and how much you have to spend on medications. Each plan has a list of prescription medicines that are covered, called a formulary. Medications generally not on a formulary include those not approved by the FDA, fertility drugs, weight loss / gain drugs and other medications.
Step 1. Go to Medicare’s formulary finder
To start your hunt for the best Medicare Part D prescription plan for your needs, go to Medicare’s formulary finder and type in the state you live in and the medications you take.
Step 2. Fill out the checklist
Next to each medication you will see some of Medicare Part D’s "plans within a plan" that cover your particular medication. Open and print out this AARP document, Quick Medicare Part D Enrollment Checklist. Here, you can write in your medications and which Part D plans cover them. While doing your research, try and find out:
How much your prescription co-pays are
What medications require pre-approval before filling
If you must use mail order services, or if you can get them from your local pharmacy.
Look into the process for filing appeals if your drug costs are not covered.
Step 3. Compare the costs of each plan with your budget
Compare the costs of each plan with your budget (see below). Register for your plan by calling Social Security at (800) 772-1213. For general help, visit MyMedicare.gov or call (800) 633-4227.
Medicare Part D has an annual deductible of $275. This means for the first $275 of prescription drug costs you need to pay 100% of out-of-pocket expenses. After that, coverage kicks in. But the coverage is not consistent. Depending on how much you spend, you may find yourself covered 95%, 75% or even 0%. Yes, zero! This is what’s called a coverage gap, also known as a "Donut Hole".
The following example might be helpful in understanding the concept: Try to imagine running your fingers from left to right over a donut lying on the table. First you feel the left-hand edge of the donut (your coverage). Then your fingers hit the empty hole in the middle (no coverage). Finally, they hit the donut again on the right (coverage again).
Medicare Part D provides prescription drug coverage in a similar way: Initially, your drug purchases are subsidized up to $2,400. If your medication costs exceed this amount, Medicare temporarily stops paying for your medications (i.e. the Donut Hole). During this period, you shoulder 100% of the burden for drug costs. However, when total out-of-pocket expenses continue past the $4,050 mark, Medicare coverage picks up again, and they cover 95% of your medication expenses.
Medicare Coverage Example (with "Donut Hole" period in yellow):
Total Drug Cost
Out of Pocket Cost
Portion Covered by Medicare
$0-$275
Deductible is out-of-pocket
No Medicare Coverage of Costs
$275-$2,400
25% out-of-pocket
75% Covered by Medicare
$2,400-4,050
All costs are out-of-pocket
No Medicare Coverage of Costs
over $4,050
5% out-of-pocket
95% Covered by Medicare
Your "total drug cost" above includes deductible expenses and co-pays for medications covered by Medicare, but does not include Medicare premiums (the annual costs to enroll in the Medicare program) or drugs not covered by Medicare.
If your drugs aren’t on the formulary, or you are denied coverage for some reason, you can file an appeal. The appeal process is fairly simple, although it may take a few steps and there is no guarantee you will receive coverage. We offer a step-by-step appeal process and a sample appeal letter.
Your first step should be to call your Part D Prescription Drug plan and ask about their specific appeal process, or review Medicare’s appeal policies.
A sample appeal process could look like this:
Step 1: Submit an appeal letter Submit an appeal letter and request a “coverage determination / formulary exception” from your Medicare plan. A decision will be made within 72 hours. If the medications are for live-saving purposes, ask for an “expedited request” to receive a decision in 24 hours). If you are denied, go to…
Step 2: Request a "redetermination."
Send your letter to your Medicare plan and request a “redetermination.” A decision will be made in 7 days. If denied again, go to...
Step 3: Send your letter to an Independent Review Entity
Send your letter to an Independent Review Entity (IRE) requesting a “reconsideration.” You can find out the address of your plan’s IRE by asking about their redetermination process. Again, a decision on your appeal will be made in seven days. If denied again, unfortunately your chances for winning the appeal may be slim. Review our Medicare Guide "Using Your Medicare Drug Plan: What to Do if Your Medicine Isn’t Covered" to see how to proceed.
Remember to consult your Medicare Part D plan about your specific appeal criteria or information needed before you proceed with any appeal process.
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As we discussed in 
Enrollment for Medicare Part D is from November 15 to December 31 each year. To enroll for Medicare, you need to call Social Security (yes, you call Social Security to enroll in Medicare. A tad confusing…) at (800) 772-1213. Or you can 
How much does it cost to join Medicare Part D? It depends on where you live, what types of medications you take, and how much you have to spend on medications. Each plan has a list of prescription medicines that are covered, called a 
Medicare Part D has an annual deductible of $275. This means for the first $275 of prescription drug costs you need to pay 100% of 
If you have limited income and resources, don’t despair. You may have a few options:
If your drugs aren’t on the 
