Understanding Medicare Part D costs
There are two costs associated with your Blue MedicareRx (PDP) plan – your monthly premium and your drug costs. Your monthly premium remains the same throughout the plan year, but is subject to change each year on January 1. Drug costs, however, may fluctuate throughout the year based on which pharmacy you use and your current Medicare Part D coverage stage.
Your premium is the fixed amount you pay for your coverage, usually monthly. Premiums are the same for every member in a plan residing in the same Medicare region, unless one of the following exceptions apply:
- Extra Help – if you qualify, you may pay a reduced premium or no premium for your Medicare Part D coverage.
- IRMAA (Income-Related Monthly Adjustment Amount) – If your income is greater than approximately $85,000, for an individual (or married individuals filing separately) or greater than approximately $170,000 for married couples, you must pay an extra amount directly to the government (not the Medicare plan) for your Medicare Part D coverage. Less than 5% of people with Medicare are affected by IRMAA.
- Late Enrollment Penalty (LEP) – if you are not enrolled in a Part D plan or other creditable drug coverage (coverage that is as good as standard Medicare Part D coverage) within 7 months of your Medicare eligibility, Medicare may add a monthly penalty depending on how long you waited to enroll. This LEP will be added to your premium for as long as you carry a Medicare Part D plan, even if you change coverage or choose another plan.
All covered drugs are assigned a tier, which can be found in your Blue MedicareRx plan’s formulary. The tier determines if your drug is subject to a deductible, and designates whether your out-of-pocket cost during the Initial Coverage Stage will be a copay or coinsurance. If a deductible applies to the drug, you will pay the retail price for the drug until you have reached your deductible.
A copay is a set dollar amount, and a coinsurance is a certain percent of the list price of the medication. Retail drug prices may vary between pharmacies, so you may pay more or less for a drug that has a coinsurance, depending on where you fill your prescription. Retail prices are also subject to change throughout the year.