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Medicare’s Prescription Drug Benefit

MEDICARE PART D DRUG PLANS are offered through insurance companies. While most seniors will want to enroll, it isn’t mandatory. You pay a premium, plus there’s often an annual deductible and a co-payment on each prescription that’s filled.

According to the Kaiser Family Foundation, monthly premiums average $41 in 2018. Four out of 10 enrollees are in plans with no deductible. Co-pays vary widely, depending on whether a drug is generic, brandname or “non-preferred.” The plans don’t cover all drugs. Rather, they are required to cover at least two drugs in each therapeutic category.

If you wait beyond age 65 to enroll in Part D, you may pay a penalty unless you were, in the intervening period, receiving a prescription drug benefit from elsewhere that was equally good. The penalty is equal to a permanent 1% increase in the base premium for every month you delay, so 10 months of procrastination will cost you a 10% higher premium for the rest of your retirement. Result: Even if you don’t currently have any prescription drug needs, you will likely want to enroll at age 65.

As you shop for a plan, see whether the drugs you take are covered by the plan and at what cost. The list of covered drugs is known as the “formulary.” Need help choosing a Medicare drug plan? Check out the Medicare Plan Finder at Medicare.gov.

Next: Medigap Insurance

Previous: Medicare Advantage

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