Deductible

 

This is the period where you must pay a certain amount of prescription costs before your Part D plan kicks in.  The maximum deductible a Part D plan can have is announced each year by Medicare. In 2024, the maximum deductible is $545.  That doesn’t mean it’s the maximum you’ll pay all year, rather it’s what you owe initially before your plan begins to help pay a portion of your drug costs.  Some Part D plans have the full $545 deductible, some have a lower deductible, some don’t have a deductible at all. It just can’t be higher than $545 in 2024.

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Initial Coverage

 

Assuming your medications are on your plan’s formulary list of drugs, this is when your Part D plan begins to pay the bulk of a drug’s cost (as high as 75% or more).  It’s “Tier-based” pricing. Typically, generic drugs are Tier 1 or Tier 2...and then, brand name drugs are Tier 3, Tier 4, and Tier 5. You will pay tier-based pricing until you reach the Coverage Gap (Donut Hole), which is when total “gross” drug costs reach $5,030 in 2024. Gross drug costs are what you pay, plus what your plan paid on your behalf.

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Coverage Gap (Donut Hole) 

 

Once your gross drug costs reach $5,030…you will enter the Coverage Gap (a.k.a. Donut Hole).  This is where you will pay 25% of a drug’s full retail “gross” cost. For some drugs (like generics), the cost might not change much.  For other drugs (like brand names), the cost could go up substantially because you’re now paying 25% of the full gross cost. It’s like this until you reach $8,000 of True Out-of-Pocket Costs (TrOOP). NOTE: $8,000 is NOT a cap or max out-of-pocket limit. See Catastrophic below…

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NOTE: $7,400 is NOT a cap or max out-of-pocket limit. See Catastrophic below…

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Catastrophic

 

When your TrOOP costs reach $8,000, you will pay no more than 5% of a formulary drug’s full gross cost for the remainder of the calendar year. 

 

TrOOP is a combination of:

• Your costs in the Deductible phase

• Your costs in the Initial Coverage phase

• Your costs in the Coverage Gap (Donut Hole) phase

• 70% of the brand name cost in the Coverage Gap (Donut Hole) phase, which the manufacturer pays

 

So this means you don’t have to spend $8,000 to reach the Catastrophic phase. It’s really in the neighborhood of about $3,300 or so of drug cost out of YOUR pocket to reach the $8,000 TrOOP (we know…it’s confusing!).

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If You Take Insulin – Impact Of Inflation Reduction Act Of 2022

 

The Part D Senior Savings Model has basically been expanded and strengthened by the passage of the Inflation Reduction Act of 2022.

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Prior To 2023:

 

Approved insulins were limited to a $35 max copay for a 30-day supply in only CERTAIN Part D plans and Medicare Advantage plans that include drug coverage

 

The $35 max copay did NOT extend through the Catastrophic phase of Part D, so the price of insulin could be higher than $35 when reaching the Catastrophic phase

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NEW For 2023 And After:

 

Approved insulins are now limited to a $35 max copay for a 30-day supply in ALL Part D plans and Medicare Advantage plans that include drug coverage

 

The $35 max copay extends through ALL phases of Part D, so the price of your approved insulin will be level through the year

 

NOTE: In order to benefit from this, your plan must cover your insulin on the formulary. So be sure to confirm this with your plan or via Medicare.gov.

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