Medicare Part D: What You'll Pay

This is the third article in a series on Medicare Part D. The first two articles addressed the basics of Part D, and then what the coverage options are.

While each stand-alone prescription-drug plan or Medicare Advantage plan approved by Medicare must offer at least the equivalent of the Standard Medicare Prescription Drug Benefit, plans can vary their coverage.

One plan may decide to cover the initial deductible, but charge you a higher premium; others may not cover the deductible, but provide generic brand drug coverage in Level 3, or the so-called coverage gap. While this is a bit confusing at first, the wide range of choices allows you to pick a plan that best suits your individual needs.

Many of these Part D plans also charge a monthly premium for the coverage they offer. The premiums, benefits and out-of-pocket obligations of these plans can vary widely. Moreover, one company may offer several different plans, each with its own unique twists.

You'll need to have a basic understanding of the typical ways that plans can vary in order to make a choice about which plan is best for you.

We break these variations into four categories: Drug Coverage, Pharmacy Networks, Enhanced Coverage and Premiums.

Specific Prescription Drug Coverage

Coverage varies by plan. An insurer's list of covered generic and brand-name drugs is called a formulary. While Medicare requires each plan to include at least two drugs in every drug category, that doesn't necessarily mean all the medications you take will be covered. You want to find a plan that covers all or most of the drugs you take, starting with the most expensive.

Each plan also categorizes its covered drugs by tiers. Plans often require you to pay different co-payment amounts for drugs on different tiers. Plans typically have three or four tiers. Essentially, the higher the tier, the higher your co-payment becomes. Typically, plans place generic drugs on a tier that requires the least amount of member co-payment, while newer drugs exclusive to one manufacturer are likely to be on higher tiers.

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