How PDP Plans Work

By now you probably have a good idea of what Medicare Part D is and the difference between PDP and MA-PD plans. The next step is understanding how Medicare Part D works.

It’s important to note that the amount of coverage you may have under your Medicare prescription drug plan can change throughout the year. This change depends on which stage of coverage you are currently in. Learn more about the stages of coverage below.

Stage 1: The Deductible

The first stage occurs at the beginning of your prescription drug coverage. This is the period when you pay for your prescription drugs in full until you meet your yearly deductible amount. After the deductible is met, you move into the Initial Coverage stage.

Some plans do not have a yearly deductible. Under these plans, you would begin in the Initial Coverage stage.

Stage 2: Initial Coverage

In this stage, you will either pay a copay or coinsurance (a percentage of the drug’s cost) when you have a prescription filled. This stage lasts until you and your plan reach $3,700 in drug spending, at which time you move into the Coverage Gap stage.

Stage 3: Coverage Gap

This stage is commonly referred to as the “Donut Hole.” It occurs after you and your plan reach $3,700 in drug spending. During the Coverage Gap stage, you are responsible for paying usually a higher portion of the drug cost. After your true out-of-pocket costs (TrOOP), reach a total of $4,950, you move into the Catastrophic Coverage stage. Out-of-pocket costs include your annual deductible as well as your copayments or coinsurance. Premiums do not count towards TrOOP.

Note: Some plans provide additional coverage in the Coverage Gap, which can lower the cost share for drugs during this stage.

Stage 4: Catastrophic Coverage Stage

After you reach a total of $4,950 in out-of-pocket expenses, you will start paying a different copay or coinsurance for both generic and brand name prescription drugs. In the Catastrophic Coverage stage, copays are typically lower than during the Initial Coverage stage. This stage lasts until the end of the plan year.

Important Reminders

When comparing plans to decide which one is right for you, there are certain things to keep in mind. Many drug plans use tools, programs and restrictions to help control costs and ensure patient safety, which you should be aware of.

Step Therapy

For some drugs, some Medicare prescription drug plans have a coverage rule that requires you to try one or more alternative, lower cost prescription drugs to treat your health condition before the plan will cover the prescribed drug. For example, if your doctor prescribes Drug A, but Drug B also treats your medical condition, your plan may require that you try Drug B first. If Drug B does not work for you, then the plan may cover Drug A as originally prescribed.

Prior Authorization

Some plans require approval before a certain prescription drug is covered.

Quantity Limit

This restriction occurs when the plan only covers a certain quantity of a particular prescription drug. If your prescribing doctor feels it is medically necessary to exceed the limit, you or your doctor must request an exception before the higher quantity can be covered.