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Medicare Part D

Medicare 2022 Part D plans can save you money on prescription drugs. Beneficiaries with Original Medicare who have Part A or Part B can enroll in a Part D plan. Then you can get a prescription card to reduce your out-of-pocket drug costs.

According to Medicare.gov, you will “disenroll from your Medicare Advantage plan and return to Original Medicare” if both of the following is true: You are in a Medicare Advantage HMO or PPO, and join a separate Medicare Part D drug plan.

FIND THE RIGHT PLAN FOR ME

Your Medicare Drug Costs

Your Medicare Part D drug costs in 2022 will vary based on your
answers to these questions:

Does The Part D Plan Cover Your List Of Prescriptions?
Which Drug Tiers Are Your Prescriptions?
Which Stage Are You In, Such As Have You Met Your Deductible?
What Pharmacy Do You Use? Is Your
Pharmacy Preferred Or Out-Of-Network?

Stage 1: Part D Deductible

Before your Part D drug plan pays anything, you first must pay the deductible. Stage one is paying Part D deductible, which increases $35 from $445 in 2021 to $480 in 2022. Once you pay this initial Part D deductible, you enter stage two.

Stage 1: Part D Initial Coverage

Stage two is Initial Coverage. In this stage, Medicare helps pay for your prescription drugs. Your copays and co-insurance vary and are a percentage of an approved amount. However, your out-of-pocket costs will not exceed 25% of the cost of brand-name and generic drugs.

For most plans, when you spend $4,430 in total drug costs in 2022, you enter the donut hole (Stage 3: Part D coverage gap).

Stage 1: Part D Coverage Gap

Stage three is Donut Hole, also called Coverage Gap. In stage three, you pay 25% coinsurance for generic and brand-name (non-discounted cost) prescription drugs. The total amount you spend inside the donut hole increases $500 from $6,550 in 2021 to $7,050 in 2022. Once you pay $7,050 in out-of-pocket drug costs, you enter stage four.

Stage 1: Part D Catastrophic Coverage

Stage four is Catastrophic Coverage. While inside stage four, you pay the greater of 5% prescription drug cost or $9.20 brand name / $3.70 generic. For example, if your brand name drug costs $100, you would pay $9.20. On the other hand, if your brand name drug costs $300, you would pay 5% or $15. However, if a generic drug only costs $50, you would pay $3.70.

The Medicare Part D Donut Hole

Medicare donut hole is a coverage gap in Medicare Part D that can affect your out-of-pocket costs in 2022. You may have heard the donut hole closed on January 1, 2020. Many people were excited because they believe their drug coverage will be free. However, you still have 25% coinsurance inside the Donut Hole.

LEARN ABOUT THE DONUT HOLE

When To Enroll In A Medicare Part D Plan.

You can enroll in a Medicare Part D Plan when you initially enroll in Medicare. Learn how to enroll in Medicare. You may be eligible to enroll in Medicare 3 months before you turn age 65. This initial Open Enrollment period includes the month of your 65th birthday and three months after the month you turned 65.

We recommend enrolling in a Medicare Part D Plan when you are first eligible to avoid late enrollment penalties. However, if you have credible drug coverage, you can postpone enrolling in Part D and avoid late enrollment penalties. For example, employer drug coverage may qualify as credible drug coverage.

How Much Are Part D Late Enrollment Penalties?

Part D late enrollment penalties accumulate at 1% per month. For example, 12 months equals a 12% late penalty. Furthermore, you will owe the late penalty every month you are in a Medicare Part D plan. It’s not a one-time penalty. You pay the late penalty every month you have a Part D Plan.

Medicare.gov calculates your penalty as follows: Multiply 1% of the “national base beneficiary premium” ($33.67 in 2022) times the number of full, uncovered months you didn’t have Part D or credible coverage.

Therefore, we recommend you find a Medicare Part D Plan when you are first eligible. To avoid accumulating a late enrollment penalty, you can sign up for an inexpensive plan.