Medicare Part D 2023
Medicare Part D Standard Benefits for 2023 have been updated by CMS (Centers For Medicare & Medicaid Services). All drug plans have basic minimums and thresholds that are set by Medicare. The following information explains the new amounts for 2023.
Medicare Part D
There are 4 basic stages to Medicare drug plans. Here is how they work in 2023:
Part D Stage 1: The Deductible
The Annual Deductible is the amount of money that you must pay you before your prescription drug copays kick in. Medicare regulates the Part D deductibles, and the maximum deductible that any insurance company can charge in 2023 will be $505. Not all plans have a deductible. Insurance companies choose whether they will charge the full deductible allowable by Medicare, a lower amount, or no deductible. The deductible does not apply to drugs on tiers 1 & 2 with most plans.
Part D Stage 2: Initial Coverage
During this stage, you will pay the copayments for your drug. The copayment depends on what tier level the drug has been assigned. There are generally 5 tier levels with Medicare drug plans. Tiers 1 & 2 are generic drugs with the lowest copays. Tiers 3 through 5 are usually brand name drugs and have higher copays.
Each time you fill a medication, Medicare tracks the total cost of the drug. That amount goes toward your Initial Coverage Limit. The limit for 2023 is $4660. If you reach that limit, you will enter the coverage gap otherwise known as the ”donut hole”.
Stage 3: The Coverage Gap (or Donut Hole)
The coverage gap is also referred to as the Donut Hole. During the coverage gap, you will pay 25% of the cost for your medications. You will continue to spend this amount until you reach the True Out of Pocket Limit (TROOP), which is set at $7,400 in 2023. The True Out Of Pocket Limit is total amount that you will pay out of your pocket, including manufacturer discounts, during the calendar year, before you enter the next phase of coverage. The catastrophic phase.
People who enter the coverage gap take expensive brand name drugs. Often times there is no generic equivalent, or the brand name drug is the most effective way to treat a patient.
Stage 4: Catastrophic Coverage
The 4th stage of Medicare drug plans is designed to protect you from being wiped out financially because of the high cost of prescription drugs. After you have reached the $7,400 out of pocket threshhold on drug costs during the calendar year, the rest of the year you will pay 5% or less for the costs of your medications.
Part D drug plans reset on January 1st. Therefore, it is important to review your drug plan costs every fall with your Medigap insurance agent. Your current drug plan carrier will send you a letter in September called the Annual Notice of Change. This will tell you exactly what is changing with your current plan for the coming year. Companies change their monthly premium and copays for each tier of medicine. Companies can also add or delete medications from their formulary, so it’s very important that you review this document carefully for any changes that might affect you.