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Prescription Drug Coverage

by Jeff Dailey
Guide to Choosing a Part D Prescription Drug Plan

When you join Medicare you may want to add coverage for your prescription medications. Medicare Prescription Drug Coverage (MPDC, or Part D) will cover both brand-name drugs and generic at participating pharmacies. Part D helps to protect you from unexpected drug expenses and help you better predict your medical spending.
If you want to enroll in Medicare Part D, make sure to do so when first eligible. If you do so at a later date, you will have to pay penalty fees that will last as long as you have the drug plan. When you do choose to join Medicare Part D, your premium cost will increase by a minimum of 1% per month for every month that you waited to join.
Prescription Drug CoverageYou can receive prescription drug coverage either by enrolling in a Medicare Advantage Plan (or any health plan that includes drug coverage) or by joining the new Medicare Prescription Drug Plan. Before you choose a plan, check that the pharmacies in the plan are convenient for you; or if not see if it offers mail order prescriptions. You should also review the formulary list of all the drugs the Medicare drug plan covers.

  • Formulary: a list of all drugs that a Medicare drug plan covers. Includes generic and brand name drugs.
  • Prior Authorization: Some drugs cost more than others, even though the less pricey drug is just as effective. Other drugs may have more side effects, or restrictions on how long they can be taken. To help ensure drugs are being taken properly, and when truly needed, some plans may require “prior authorization”. Prior authorization is when your doctor provides the plan with proof that there is a medically necessary reason you must use a particular drug.

Coverage Gap:

  • If you have high drug costs, you may consider which plans offer additional coverage until you spend $4.350 out-of-pocket. In some plans, if your costs reach an initial coverage limit, then you pay 100% of your prescription costs. This is called the coverage gap. This “gap” in coverage is generally above $2,700 in total drug costs until you spend $4,350 out-of-pocket. Some plans might offer some coverage during the gap. Even in plans where you pay 100% of covered drug costs after a certain limit, you would still pay less for your prescriptions than you would without this drug coverage.


  • Drug plans have to contract with certain pharmacies in your area. Check your plan to see which pharmacies are included. Some plans will also offer mail order prescriptions.

How does Medicare Prescription Drug Coverage work with Employer or Union coverage?

  • If your drug coverage from your employer/union is on average at least as good as MPDC, you can keep it as long as its offered.
  • If your employer/union coverage stops, you will have a special enrollment period to sign up for MPDC (with no penalty fee).

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