PART D: THE FOUR (4) COVERAGE STAGES

Question 1

Part D has four (4) basic drug coverage stages. What are they?

Answer 1

1. Annual Deductible.
2. Initial Coverage.
3. Coverage Gap (Donut Hole)
4. Catastrophic Coverage.

Question 2

The Annual Deductible is the First stage of Part D drug coverage:

Answer 2

Stage 1 - Annual Deductible: This stage begins with your first prescription of the plan year. You pay the full cost of your prescriptions until your spending adds up to the amount of your deductible. If your plan has a $0 deductible, you skip straight to the next stage. Keep in mind that some deductibles may only apply to drugs on specific tiers, so if you don’t take any medications on those tiers, you may not have any deductible.

Question 3

The Initial Coverage is stage 2 of Part D drug coverage?:

Answer 3

Stage 2 - Initial Coverage: This stage begins immediately if your plan has no deductible or when the prescription payments you’ve made equal your plan’s deductible. Your plan pays for a portion of each prescription drug you purchase, as long as that medication is covered under the plan’s formulary (list of covered drugs). You pay the other portion, which can be either a copayment (a set dollar amount) or coinsurance (a percentage of the drug’s cost). The amount you pay depends on the tier level assigned to your drug. This stage ends when the amount spent by you and your plan on your covered drugs adds up to equal the initial coverage limit set by Medicare for that year.

Question 4

The Coverage Gap (Donut Hole) is the third stage of Part D drug coverage:

Answer 4

Stage 3 - Coverage Gap (Donut Hole) Stage: Not everyone enters this stage. It begins when you and your plan have collectively spent a certain amount on your covered drugs. In the coverage gap, the plan is temporarily limited in how much it can pay for your drugs. If you do enter the gap, you’ll pay a percentage of the plan’s cost for covered brand-name drugs and generic drugs. While the percentage you pay for brand-name drugs is lower, the price of that drug may be much higher than the generic option. You exit the coverage gap when your total out-of-pocket cost on covered drugs (excluding premiums) reaches a certain threshold.

Question 5

The Catastrophic Coverage is the 4th stage of the Part D drug coverage:

Answer 5

Stage 4 - Catastrophic Coverage: Once you’ve exited the coverage gap, you enter catastrophic coverage. During this stage, you pay a small copayment or coinsurance for each prescription drug. This stage continues for the rest of the plan year.