Medicare is an essential part of how retirees manage their finances. Historically, Medicare recipients only had access to hospital coverage under Part A and outpatient medical services like doctor visits under Part B. Over time, though, the program expanded to include different types of services, giving people the option of choosing either traditional Medicare or Medicare Advantage.
Prescription drug coverage under Medicare Part D is the newest addition to the Medicare lineup. Below, let's make a more in-depth examination of the details of Part D, including its coverage and costs for 2020.
What does Medicare Part D cover?
Medicare Parts A and B come directly from the federal government, but that's not the case for prescription drug plans. Private insurers provide the coverage that Medicare Part D offers, and the specifics differ from plan to plan.
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Because of these plan differences, there's no way to say exactly what Part D will cost. In particular, the following things can distinguish one Part D plan from another:
- One plan might offer coverage for a particular drug that another plan omits from coverage.
- Some plans put drugs into categories, some of which have higher copayments than others.
- Plans can require using certain pharmacy benefit management companies to fill prescriptions.
However, there are limits on how much flexibility Part D plans have. They typically can only change drug coverage at the end of the year, which means you can count on a particular drug getting covered throughout the plan period.
How much does Medicare Part D cost?
As with coverage options, what you'll pay for various Medicare Part D plans can differ substantially. Some Part D plans are actually available at no cost at all, although their coverage of prescription drugs tends to be limited, at best. More comprehensive plans typically charge at least modest monthly premiums.
Whatever the base cost of a Part D plan happens to be, those who have relatively high incomes have to watch out for possible surcharges above and beyond that base monthly premium amount. If you look at the appropriate income brackets below, you can see where people in certain ranges fall in terms of having to pay extra.
|
For individuals with this income: |
Or joint filers with this income: |
The Part D premium surcharge in 2020 is: |
|---|---|---|
|
$87,000 to $109,000 |
$174,000 to $218,000 |
$12.20 |
|
$109,000 to $136,000 |
$218,000 to $272,000 |
$31.50 |
|
$136,000 to $163,000 |
$272,000 to $326,000 |
$50.70 |
|
$163,000 to $500,000 |
$326,000 to $750,000 |
$70 |
|
Over $500,000 |
Over $750,000 |
$76.40 |
Data source: Medicare. Note: Married persons filing separately who live together at any time during the year pay $70 if their income is $87,000 to $413,000, or $76.40 if their income is more than $413,000.
There are a few other costs you might have to pay. First, plans are allowed by law to charge deductibles of as much as $435 in 2020, up $20 from 2019's levels. However, Part D plans don't have to charge the full amount, or any deductible at all.
Also, Part D plans can set fixed copays or certain coinsurance percentage amounts to require participants to bear some of the costs of each prescription drug they use. You should keep in mind, though, that there's an out-of-pocket maximum that Part D plans are allowed to force participants to pay. Once the total of your cost and the value of any manufacturer discounts you received on your prescription drugs hits $6,350, you'll reach the catastrophic coverage level. At that point, what you'll owe is $3.60 per prescription for generics and $8.95 for brand-name drugs, or 5% of total drug cost if it's more.
Get the prescription drugs you need
In its short history, Medicare Part D has become quite popular, and it's important for those retirees struggling to make ends meet. Looking into Part D coverage can be the best move an older American can make to protect their health.
