Medicare Part D: Choosing a Prescription Drug Plan

Consider costs, coverage, and restrictions when shopping for a Medicare Part D prescription drug plan.

Updated January 18, 2019

If you are considering enrolling in the Medicare Part D prescription drug plan (PDP), you need to find out which private drug plans are available in your area and then select the best plan for your needs. Coverage under the Medicare Part D prescription drug program is not handled by Medicare itself. Instead, it is managed by private health insurers and managed health care companies, which offer different plans in different geographic areas.

Gather Your Documents

Before you search online or contact any agency or counselor for help choosing a Part D plan, have the following information handy:

  • a list of the drugs you regularly use—including the brand names if you don't use all generics—dosage size and frequency, and current monthly cost
  • name and address of your current pharmacy
  • whether you currently receive Medicaid benefits (Medi-Cal in California), and
  • whether you are, or think you might be, eligible for a Part D low-income subsidy.

Find Available Part D Prescription Drug Plans

You may enroll only in a plan that operates in your geographic area. The following organizations can give you information about the Part D plans available to you.

Medicare. The Centers for Medicare and Medicaid Services (CMS) has a great Medicare plan finder that can tell you what plans are available where you live and can help narrow your options based on the medicines you regularly take and the pharmacy you use. Medicare gives the PDPs star ratings and let's you compare them against each other based on the exact drugs you take. Go to the Medicare Plan Finder at www.medicare.gov/find-a-plan. Or you can contact CMS by phone at 800-MEDICARE (800-633-4227).

SHIP or HICAP. The State Health Insurance Assistance Program (SHIP), sometimes called the Health Insurance Counseling and Advocacy Program (HICAP), can tell you about the Part D plans available where you live, can identify the plans that cover the drugs you regularly use, and give you information about plan costs. For the nearest SHIP or HICAP office, check the business listings of your white pages phone directory.

State department of insurance. Every state has a government agency that oversees insurance matters. You can contact your state department of insurance for the names, addresses, and phone numbers of all companies that offer a Part D plan in your state.

The best information comes from the plan itself. Before you make a final choice, directly contact any plan that interests you and ask for a complete description of the plan, the drugs it covers, and its costs. They should be able to email you a formulary and summary of benefits describing copays for various tiers of drugs and whether there is a deductible. You can get the phone number and address of any plan from the Medicare website or your state department of insurance.

Choose a Part D Plan

Deciding which Part D plan is best depends on several factors, including whether you have other health insurance through your employer or union (or your spouse's), whether you qualify for a low-income subsidy, and your age and health. Additional important considerations include:

Your prescriptions. The prescription medications you regularly take, or their generic equivalents, must be included on the plan's formulary (its list of covered drugs). If not, the plan is useless to you. If you cannot find a plan that includes all of your drugs, look for one that covers your most expensive drugs.

Costs. The costs of a Part D plan can vary in several ways. Premium payments often vary, but the copayment amounts are more important. Most plans have tiered copayments, meaning the copayments differ for generic versus brand-name drugs and for different classes of medications. Compare the copayment amount under each Part D plan you're considering for each drug you take.

Coverage gap. Determine whether the plan provides additional coverage within the so-called "coverage gap" (also known as the "donut hole"). Once your total yearly medication expense reaches a certain amount ($3,820 in 2019), Medicare allows Part D plan to pay less of the cost of your drugs, meaning your copays may be higher while you're in the donut hole. (But you can't be charged more than 37% of the PDP’s cost for covered generic drugs or more than 25% of the cost of brand name drugs.)

Access restrictions. You must determine whether a plan places any access restrictions on your drugs, such as prior authorization, generic drug or equivalent drug substitution, step therapy, or supply limits. The fewer restrictions a plan has regarding your drugs, the better for you.

Pharmacies. For many people, obtaining their medications from a nearby, helpful local pharmacist is important. If two or more plans offer similar coverage, the type and location of the pharmacy from which you can get your drugs through each plan may help you decide. In addition, check what the plan's prices are for 90-day mail order prescriptions.

Restrictions on coverage. Insurance companies may impose many different types of restrictions on their Part D coverage. For example:

  • A plan may change its formulary at any time.
  • Some plans require the pharmacy to substitute a generic version of a drug unless you request and receive an exception.
  • Plans may require documentation from your physician that you need a particular drug before the plan will cover it.
  • Some plans impose a step therapy requirement, which requires you to try the least expensive drug in its class and then get your doctor to certify that that drug doesn't work before you may "step up" to the higher-cost drug.
  • Some plans restrict the number of doses in each prescription.

Stand-Alone Drug Plan or Managed Care Plan?

Part D drug coverage is available through either a stand-alone prescription drug plan (PDP) or as the prescription drug component (called an MA-PD) of a Medicare Advantage managed care plan. Both options offer equivalent coverage, although each plan is different and costs vary.

Enroll in Part D

You enroll in a Part D plan by signing up directly with the plan you want to join. Private insurance companies administer each Part D plan using their own enrollment forms and procedures.

If you do not enroll in a Part D plan when you are first eligible for it, your premiums will be higher when you do finally enroll because Medicare charges an additional 1% for each month you delay enrolling. So, if you intend to enroll in a Part D plan as soon as you are eligible for Medicare, you should do the paperwork ahead of time.

If you qualify for Medicaid, you will be automatically enrolled in a Part D plan. However, you may switch plans if you find one better suited to your needs. (To learn more about Medicaid, read Nolo's article Medicare and Medicaid: What's the Difference?.)

For More Information

To learn more about Medicare Part D and other health insurance options for your retirement years, read Nolo's article Medicare Part D Prescription Drug Coverage: The Basics or get Social Security, Medicare & Government Pensions, by Joseph L. Matthews and Dorothy Matthews Berman (Nolo).

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