Medicare Part D was authorized by Congress on January 1st, 2006, under the “Medicare Prescription Drug, Improvement, and Modernization Act of 2003.” Prior to this bill, Medicare did not cover outpatient prescription medications. So, one might ask, how does Medicare Part D work? We will discuss this in several parts below.
How is Medicare Part D Administered?
Medicare Part D, unlike Medicare Parts A and B, is administered by private companies that are contracted and authorized to sell by the federal government. These companies can vary in price by state and includes some of the most well-known organizations like UnitedHealthcare, Aetna, and Humana.
Cost of Medicare Part D
Every plan under Medicare Part D can be different but must meet the established requirements that are mandated by the federal government. Typically, these plans consist of a monthly premium, an annual deductible ($445 maximum for 2021), and co-payments and co-insurance depending on the medication. Not all drugs are covered by every plan, so it is important to pick the option that best suits the needs of the client. This can be done by having the best technology in the business as an agent, (see here.) There are many other moving parts, like the “Donut Hole,” that can have an impact on cost as well.
Drugs Under Medicare Part D
Prescription drugs are typically broken down into 5 tiers. Tier 1 being the preferred generics and least expensive, to tier 5 being the most expensive specialty drugs. These private companies have all their covered drugs and tiers broken down into what they call their “drug formulary.” Although these can be altered on a case-by-case basis by going through a formulary exception, formularies are somewhat set in stone on a yearly basis.
Where Does Pinnacle Financial Services Come in?
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