What You Need to Know About the Medicare Part D Deductible

Medicare Part D plans can help you manage your prescription drug costs. But because these plans can be complex, some beneficiaries find the rules and procedures to be confusing. You might be wondering why you sometimes never seem to meet the deductible, why some drugs are free even when you haven’t met your deductible, or why the cost of drugs might change throughout the year. The following information can help to clear up any misunderstandings.

Plan deductibles are capped by Medicare each year. For 2021, the cap is set at $445. Your Part D deductible can be any amount up to $445. The deductible is what you must pay for covered drugs before your plan covers the rest of the cost. The key word here is “covered”. Only covered drugs are subject to, and can fulfill, your deductible.

Your plan determines which drugs are subject to the deductible, according to “tiers”. In many cases that includes medications from Tiers 3, 4, and 5, but plans can vary. You must pay the full cost of covered medications until you meet your deductible for the year; then your plan pays for them. If you are prescribed a medication that does not fall under your “covered” medications, you pay the full cost of them and that amount is not applied to your deductible. This can explain why you sometimes pay more than your deductible amount for certain medications, and yet you don’t actually meet your deductible.

After you do meet your deductible for the year, you enter the Initial Coverage payment stage. Now, when you fill a prescription for a covered medication, the plan will charge a copayment or your coinsurance. Costs often drop at this stage.

These rules apply to all Part D plans. Whether you are enrolled in a stand-alone Part D plan, or your prescription benefits are rolled into a Medicare Advantage plan, the benefits work according to the above rules.

You should receive a monthly prescription summary to help you understand your benefits. During any month in which you fill prescriptions, your plan sponsor should send you a summary of your medications and costs. This Explanation of Benefits (EOB) will tell you which refills you’ve received, a breakdown of your costs, the status of your deductible, and more.

If you need additional assistance to understand your Part D deductible and out-of-pocket costs, remember that you can always contact your provider.