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Medicare Part D Explained

Medicare Part D is the Prescription Drug benefit of Medicare. There is no “Government Option” Part D benefit like there are with A and B. Each Part D plan is offered by a private insurance company. In order to have coverage for prescriptions, you must enroll or join a Part D plan offered by a private insurance company (like United Health Care or Blue Cross and Blue Shield) that contract with Medicare.

Medicare Part D Basics

If you do not elect to join a Part D plan, you will be responsible for the full retail cost of your prescriptions. If you do not join a Part D plan when you are first eligible, a late enrollment penalty will start to add up. This penalty will be applied when you finally do decide to join a plan. You will be required to pay the higher price for the rest of your life.

The two most common ways to buy Part D are:

  1. Buying a stand-alone plan (along with Medicare and a Supplement)
  2. Enrolling in a Medicare Advantage Plan that also includes Part D.
    • When you elect Part D coverage, you get an ID card to use at your local pharmacy that shows what your co-pay is for different drugs ($5 for generics). Many plans also offer a mail order option for maintenance drugs as well.

There are a few moving “parts” to Part D. They are:

  • Monthly premium – average monthly Part D premiums range from $6 – $100 for 2024.
  • Deductible amount – the amount you have to pay before your coverage kicks in.
  • Copay – the amount you pay at a pharmacy after you meet your deductible and will vary from plan to plan and from drug to drug. Drug copays range from $0 for a generic up to $100 for a brand name.
  • Coverage Gap – AKA the “Donut Hole.” What is the Medicare Donut Hole? Read our blog post here.
  • Formulary – each company has a different list of drugs they cover. This is crucial as the drugs you currently take may or may not be covered by different plans.
  • Preferred pharmacy – while this isn’t as big of an issue, it is still something to consider. Most pharmacies will take any Part D plan from any company but should still be confirmed.

Choosing a Medicare Part D Plan

Since each company charges a different monthly premium, covers different drugs, and has different copays, what is the best way to choose a plan? We at Steinlage Insurance Agency recommend starting at’s Prescription Plan Finder. This unbiased source allows you to plug in your zip code and current prescriptions to find which plan will be your total lowest cost (taking into consideration ALL factors, not just price.)

While this is a great place to start, we suggest you contact us before signing up as there are a few other things to be aware of.

Medicare Part D Coverage Rules

Each Part D company has three different coverage rules that can cause headaches when getting certain prescriptions covered:

PA – Prior Authorization

All Plans may require a “prior authorization” to make sure certain prescription drugs are used correctly and that only when medically necessary. This means before your plan will cover a certain drug, your doctor must first contact your plan and show there’s a medically-necessary reason why you must use that particular prescription drug.

ST – Step Therapy

Step therapy is a type of prior authorization. With step therapy, in most cases, you must first try certain less expensive drugs that have been proven effective for most people with your condition before you can move up a “step” to a more expensive drug. For instance, your plan may require you to first try a generic prescription drug (if available), then a less expensive brand-name prescription drug on its formulary, before it will cover a similar, more expensive brand-name prescription drug. However, if you’ve already tried the similar, less expensive drugs and they didn’t work, or if your doctor believes your medical condition makes it medically necessary for you to be on the more expensive step-therapy prescription drug, he or she can contact your plan to ask for an exception. If your doctor’s request is approved, your plan will cover the step-therapy prescription drug.

QL – Quantity Limits

For safety and cost reasons, plans may limit the number of prescription drugs they cover over a certain period of time. For example, most people who are prescribed a heartburn medication take 1 capsule per day for 4 weeks. Therefore, a plan may cover only an initial 30-day supply of the heartburn medication. If you need more, you may need your doctor’s help to provide more information to the plan.

When evaluating your Part D options, you should consider the restrictions of your medicine along with the different factors mentioned above. The lowest-priced plan may not cover your prescriptions or may require you to change your drugs. This ultimately can lead to higher prices in the long run along with the added stress and frustration of having to visit your doctor to get your prescriptions switched over.

Part D Enrollment

Medicare Part D companies renew their contracts with Medicare annually. This means that each year, the moving “parts” can move. You then have the opportunity to adjust your coverage accordingly. This can be done during the Annual Enrollment Period or AEP from 10/15 to 12/7 of each year. Your change begins 1/1 of the following year.

Medicare Insurance Broker

Steinlage Insurance Agency can help! We have advised clients on Part D for years and are able to use all available resources to help pick the plan that fits your prescriptions and particular situation.

Give us a call at 636-561-5060 for a free, no-obligation phone consultation to help narrow down your Medicare Part D choices.

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