Part D is a separate plan that can be added to Part A and/or Part B, but is usually included in Part C (Medicare Advantage). Part D plans are provided through private insurance companies for a monthly premium in addition to your other monthly Medicare premium(s). The federal government has a standardized cost for Part D [$33.06 in 2021], but the amount you pay can vary across private insurance companies.
All covered prescriptions fall into one of these five tiers:
- Tier 1: Preferred generic drugs (least expensive)
- Tier 2: Non-preferred generic drugs
- Tier 3: Preferred brand name drugs
- Tier 4: Non-preferred brand name drugs
- Tier 5: Specialty drugs (most expensive)
Alex recommends adding Part D coverage to your plan, even if you aren’t currently taking any prescriptions in order to avoid the Part D penalty below.
Part D Penalty
You may receive a penalty of 1% of the national base beneficiary premium [$33.06 in 2021] for each full month you didn’t have coverage. This fee is added to your plan’s monthly premium. The penalty beings after any continuous period of 63 days or more without Part D itself or credible prescription drug coverage. Medicare defines “credible coverage” as coverage that is expected to pay as much as the standard Medicare prescription drug coverage, on average. You can receive the Part D penalty even if you’re not taking prescriptions.
To avoid this penalty, join a plan with Part D coverage if you know you will not have prescription drug coverage when you’re Medicare eligible, avoid a break in coverage of longer than 63 days, and pay attention to your mail. Plans with Part D coverage often send letters asking for proof of Part D or credible coverage in the past. Don’t hesitate to contact Alex about any question related to Part D or how to avoid the penalty.