A Closer Look at Medicare Part D (Prescription Drug Coverage)

Contributed by: James Smiertka James Smiertka

Today, we will take a more in-depth look at an important aspect of Medicare coverage: Part D, which covers prescription medications. Each Medicare Prescription Drug Plan has a unique list of covered drugs which is called a formulary.

Here are some important notes regarding Medicare Part D coverage:

  • Drugs may be placed into different cost “tiers” within the specific formulary
  • More common, generic, drugs will often be in a lower tier that will cost you less
  • You can choose your Part D plan based on your current list of medications to help you obtain the most appropriate plan for you
  • Commercially available vaccines that are medically necessary to prevent illness must be covered by a Medicare drug plan (if not already covered under Medicare Part B)
  • Formularies are unlikely to cover every existing drug and will often have drugs placed outside of tiers that require special approval to be covered
  • You should receive an “Evidence of Coverage” (EOC) each September from your plan which explains what your Medicare drug plan covers, how much you pay, etc.
    • You should review this notice each year to determine if your current plan will continue to meet your needs for the next calendar year or if you may need to consider another plan
    • If you do not receive this important document, contact your plan
      • Your plan’s contact information should be available via “Personalized Search” on the Medicare website.
      • You can also search by your plan name.

Common Coverage Rules:

  • Prior Authorization: Your prescriber may be required to show that the drug is medically necessary for the plan to authorize coverage
  • Quantity Limits: Different medications may have limits on quantity fillable at one time (ex: 10 days, 14 days, 30 days, 60 days, etc.)
  • Step Therapy: You must attempt treatment with one or more similar, lower cost drugs before the plan will cover the prescribed drug

If you or your prescriber believe one these coverage rules should be waived, you can contact your plan for an exception. Your plan’s contact information should be available via “Personalized Search” on the Medicare website.

  • You can ask your prescriber or other health care provider if your plan has special coverage rules and if there are alternatives to an uncovered drug
    • It is not uncommon to be required to attempt treatment with other similar drugs (often less expensive, lower tier) on your formulary first
  • You can obtain a written explanation from your plan which should include the following:
    • Whether a specific drug is covered
    • Whether you have met any requirements to be covered
    • How much you will be required to pay
    • If an exception to a plan rule may be made if requested
  • You can request an exception if:
    • You or your prescriber believes you need a specific drug that is absent from your plan’s formulary
    • You or your prescriber believes a coverage rule should be waived
    • You believe you should pay less for a more expensive, higher tier drug since your prescriber believes you cannot take any of the less expensive, lower tier options for your condition
  • If you disagree with your plan’s denial of coverage there are five additional levels in the appeals process

Additional Considerations:

  • Your Medicare Part D plan is allowed to make changes to its formulary during the year
    • These changes must be made within existing Medicare guidelines
    • If a change is made to your formulary:
      • You must be provided written notice at least 60 days prior to the effective date of the formulary change
      • OR your plan will be required to provide the current drug for 60 days under the previous plan rules
  • Many Medicare Advantage Plans (Part C) cover prescription medication coverage, and you cannot have concurrent coverage of prescriptions through both a Medicare Advantage Plan and a Medicare prescription drug plan. You’ll be unenrolled from your Advantage Plan and returned to Original Medicare if you have an Advantage plan with prescription coverage in addition to a Part D Prescription Drug Plan.
  • Even if a desired medication is covered, it is important to note that some plans may require fulfillment via mail order services in lieu of local retail pharmacy pickup
  • This may be very inconvenient for some (ex: people that travel often) and may be avoidable when comparing plans

If you have any questions, please contact your financial advisor at The Center. We are more than happy to help you or refer you to one of our expert resources.

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.®


Sources: www.medicare.gov
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.