CRACKING THE CODE Understanding Medicare Parts C and D

Chapter 3: Unveiling Medicare Part D (Prescription Drug Coverage)

Understanding formularies, tiers, and coverage gaps is essential for beneficiaries navigating the Part D plan landscape: Formularies, Tiers, and Coverage Gaps

Formularies: Part D plans have formularies, which are lists of covered drugs and their associated costs. Formularies may vary between plans and can impact the availability and cost of medications for beneficiaries.

Tiers: Drugs on a Part D plan's formulary are often grouped into tiers, with each tier representing a different cost sharing amount. Tier 1 typically includes generic drugs with the lowest cost-sharing, while higher tiers may include brand name drugs with higher cost sharing requirements .

Coverage Gaps: The coverage gap, or "donut hole," is a temporary limit on what the Part D plan will cover for prescription drugs. Beneficiaries may enter the coverage gap once they and their plan have spent a certain amount on covered drugs. During this period, beneficiaries may pay higher out-of-pocket costs for their medications until they reach catastrophic coverage.

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