Medicare Corner
Part D Coverage Phases 1. What are the Part D coverage phases? The cost of your Medicare Part D-covered drugs may change throughout the year. If you notice that prices have changed, it may be because you are in a different phase of Part D coverage. There are four different phases—or periods—of Part D coverage: • Deductible period • Initial coverage period • Coverage gap • Catastrophic coverage 2. What is the deductible period? The deductible period is when you pay the full negotiated price for your covered prescription drugs until you meet your Part D deductible. Once you have met your deductible, the plan will begin to cover the cost of your drugs. Deductibles can vary from plan to plan. A plan’s deductible can be no higher than $545 in 2024, and some plans do not have deductible. 3. What is the initial coverage period? After you meet your deductible, your plan will help pay for your covered prescription drugs and you pay a copayment or coinsurance. This is your initial coverage period. How long you stay in the initial coverage period depends on your drug
costs and your plan’s benefit structure. For most plans in 2024, the initial coverage period ends after you have accumulated $5,030 in total drug costs. 4. What is the coverage gap? The Medicare Part D donut hole or coverage gap is the phase of Part D coverage after your initial coverage period. You enter the donut hole when your total drug costs—including what you and your plan have paid for your drugs— reaches a certain limit. In 2024, that limit is $5,030. In all Part D plans in 2024, you leave the coverage gap after you reach $8,000 in out-of-pocket costs for covered drugs. 5. What is catastrophic coverage? In all Part D plans in 2024, you enter catastrophic coverage after you reach $8,000 in out-of-pocket costs for covered drugs. During this period, as of 2024, you owe no cost-sharing for the cost of your covered drugs for the remainder of the year. This is new for 2024, and it changes the catastrophic “phase” of coverage. 6. Will these coverage gaps work in the same way in 2025? In 2025, the structure of Medicare Part D will change. There will be only three coverage phases – the deductible, initial coverage period, and a zero-cost phase
after an out-of-pocket cap is reached. Your out-of-pocket costs will be limited to $2,000 in deductibles, copays, and coinsurance. Also starting in 2025, you have the choice to spread out-of-pocket Part D costs over the year. This will not reduce the total amount owed over the year, but can allow you, for example, to spread the cost of your deductible over 12 months. Whether this type of payment plan will be beneficial will depend on your circumstances and preferences. Remember that these changes are not in effect until 2025. For more information, contact PCOA Medicare at (520) 546-2011. “Medicare is not a piece of paper. It is a human bond—a bond between those who have lived and those who will someday live in the hope and the belief that our own lives will be extended, enriched, and ennobled by the sharing of them with others.” - Lyndon B. Johnson
May/June 2024, Never Too Late | Page 11
Pima Council on Aging
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