HealthInsurance.com by TogetherHealth logo
Find a Medicare plan
Get Started →
Learning Center > Medicare Part D Phases

Medicare Part D Phases

Medicare Part D Phases

Medicare Part D offers important prescription drug coverage and is part of both Original Medicare and Medicare Advantage. As a result, it’s important to understand the Medicare Part D phases that occur each year.

There are four Medicare Part D stages. Depending on your drug costs, you may not reach all four in a given year. However, it’s still vital to know what to expect in case your prescription drug needs increase over time.

Here’s what you need to know.

What are the 4 Stages of Medicare Part D?

What are the Medicare Part D stages of coverage? As we mentioned, there are four of them. They start with the deductible period, then initial coverage, followed by the donut hole, and then catastrophic coverage. We’ll go in-depth into each stage so that you can fully understand how they work for you.

Deductible Period

During the deductible period, you pay the full price of your prescription drugs until you meet your Medicare Part D deductible. The deductible may vary from one plan to another, but Medicare does set a maximum limit.

Medicare Part D Deductible 2021

In 2021 the deductible limit for Medicare Part D is $445.

Some plans have a $0 deductible, meaning that you skip the first of the Medicare Part D payment stages and move straight into initial coverage.

Other plans have a deductible that only applies to certain tiers of medications, while other medications are covered right away. For instance, generic medications may be covered immediately while name-brand medications have a deductible.

Make sure you review the Medicare Part D deductible when you compare plans each year so you can choose the plan that’s best for your needs.

Initial Coverage

Once your deductible is met, you move into initial coverage. This is where your Medicare Part D plan covers your medication, and you only pay a copayment or coinsurance each time. Each plan will have a different list of covered medications and different out-of-pocket costs, so be sure to carefully review the details of your plan.

The initial coverage period lasts until you hit $4,130 in total drug costs, which includes both the amount you have paid during the year and the amount your plan paid. Depending on your medical needs, you may not hit the limit, but if you do, you enter the coverage gap known as the Medicare donut hole.

Medicare Part D Donut Hole

Once you hit the Medicare Part D initial coverage limit, you enter a gap in coverage known as the donut hole. In the past, you had to pay a significant amount of your drug costs during this gap. The coverage gap for all drugs essentially closed in 2020, meaning your share of costs in the “donut hole” is limited to 25% of the drug cost (both brand-name and generic).

This percentage will replace the copayment or coinsurance you were paying during the initial coverage period. S For a generic drug that costs $100, you would pay $25 for that drug during the donut hole. For brand-name drugs, even though you only pay 25% of the cost, around 95% of the cost will count toward your out-of-pocket total to move you out of the coverage gap.

Once you have paid $6,550 in out-of-pocket costs for prescription drugs, you’ll exit the donut hole and enter catastrophic coverage.

Medicare Part D Catastrophic Coverage

The final stage of Medicare Part D is catastrophic coverage. What is catastrophic coverage in Medicare Part D? It’s a phase designed to help those who have especially high prescription drug costs.

During catastrophic coverage, you’ll pay significantly lower copayments or coinsurance for your remaining prescriptions for the year. For Medicare Part D catastrophic coverage in 2021, you’ll pay 5% of the cost of drugs, and the plan pays for the remainder.

Does Medicare Part D Have an Out-of-Pocket Maximum?

There is no out-of-pocket maximum for Medicare Part D, but once you hit catastrophic coverage, your out-of-pocket costs drop significantly. Generally, you’ll pay a a minimum of $9.20 for brand-name medication and $3.70 for generic drugs, or 5% of retail costs, whichever is higher.

Learn More About Medicare Part D Coverage Stages

Medicare Part D is important coverage for many Medicare beneficiaries. That’s why it’s vital to understand the various Part D phases and whether you will enter them in a specific year. Comparing plans is easier with a licensed insurance agent by your side. Contact us to learn more or use our plan comparison tool to learn about plans in your area.

What you should read next

Mental health can be an issue regardless of a person's age. In fact, it’s estimated that more than 25% of the adult population struggles with their mental health. And issues relating to mental health can have an enormous impact on your ability to navigate and enjoy life (especially in your golden years). So if you rely on Medicare coverage, you might wonder “Does Medicare cover mental health counseling?” And the good news is that Medicare does cover a wide variety of mental health services. This guide will help you understand what you can expect from Medicare coverage for mental health and answers common questions about this coverage. Medicare and Mental Health As we mentioned, Medicare does cover mental health care. There are two kinds of mental health treatment: outpatient and inpatient. With outpatient care, you see a doctor or therapist from time to time. Inpatient care involves living in a facility or institution. Keep in mind that Original Medicare will have specific coverage levels with copayments or coinsurance.Medicare Advantage plans have to offer at least as much coverage as Original Medicare and often may offer more coverage, and potentially lower cost shares. . Does Medicare Cover Counseling?Counseling is a common outpatient treatment for a variety of mental health conditions. Is mental health therapy covered by Medicare? Yes, it is!Outpatient care is covered under Medicare Part B. The coverage will only apply if the therapist accepts an assignment from Medicare. You’ll pay your Part B deductible (if it hasn’t already been paid) and then 20% of the Medicare-approved amount for the counseling services.There are specific types of treatment that are not covered. These may include:Transportation to and from mental health appointmentsActivities for recreation to divert attention from other issuesSupport groups for socialization (group psychotherapy is covered)Job skills training or testing not related to your mental health treatmentMealsIf you have a Medicare Advantage plan, you will get at least as much coverage as Original Medicare. There may also be additional benefits. You’ll want to check with your specific plan.If you need counseling for mental health, don’t be afraid to get the care you need!How Many Therapy Sessions Does Medicare Cover?There is no specific limit to the outpatient therapy sessions covered by Medicare, provided they are necessary and there is a reasonable expectation that the treatment will help you improve. If you require inpatient mental health care in a hospital or institution, there is a lifetime limit to the number of days Original Medicare will cover.Your Medicare Advantage plan may have different guidelines, although they shouldn’t be more restrictive than Original Medicare. Be sure you talk to your insurance provider directly to ensure your therapist is in the network and to find out how therapy sessions are covered.Does Medicare Cover Depression?Depression is one of the most common mental health diagnoses. Unfortunately, the number of American adults struggling with depression or anxiety significantly increased during the COVID-19 pandemic.With Medicare, you can get one depression screening per year at no cost to you as long as your provider accepts an assignment from Medicare. If you need therapy or counseling, you’ll pay your Part B deductible (if it hasn’t already been paid) and then 20% of the Medicare-approved cost per session. Learn more about the latest updates to Medicare deductibles and premiums.Medicare Advantage plans will offer similar arrangements but may have additional benefits as well. You’ll want to talk to your insurer before you set up your depression screening and therapy appointments. The most important part of getting coverage through Medicare Advantage is to use the provider network that is part of the plan.Does Medicare Cover Mental Health Hospitalization?Is psychiatric treatment covered by Medicare if you need to be hospitalized? Inpatient care is covered by Medicare under Part A.Similar to other inpatient hospitalization, you’ll pay a $0 deductible for each day up to 60 within a benefit period. Days 61-90 will have a $389 per day charge in 2022. Beyond 90 days per benefit period, you’ll need to use your lifetime reserve days, which you only have 60 of in your lifetime. This article can provide additional information about Medicare costs.Overall, mental health hospitalization is limited to 190 days over your lifetime. After that, Original Medicare will not provide coverage and you’ll need to pay 100% of your costs.In addition to the inpatient hospitalization costs, you’ll also pay 20% of the Medicare-approved amount for therapy or other mental health services you get while you’re in the hospital. These are covered by Medicare Part B. Prescription drugs may be covered under Medicare Part D or Part A.If you have a Medicare Advantage plan, you may have similar limits or they may be more generous. You’ll need to check with your specific plan for details.Medicare Mental Health Reimbursement RatesHow much does mental healthcare cost with Medicare? With Original Medicare, you’ll pay the normal copayments or coinsurance for either inpatient or outpatient care. For example, a therapy session will cost you 20% of the Medicare-approved amount, as long as your deductible has been paid and your therapist accepts the assignment.With Medicare Advantage, you may have different deductibles, copayments, or coinsurance. You’ll need to talk to your insurance company to find out the details. It’s a good idea to do this before you commit to treatment so that you can ensure you know what to expect.  Contact Us to Learn More About Medicare and Mental Health CoverageIf you have any additional questions about Medicare and mental health coverage, or you’d like to talk to a licensed agent to choose the right Medicare plan for your needs, we're here to help. Contact us today!
Read More
  One main concern for today’s medical care is ensuring that we prevent illness, or detect illness early so that it can be treated quickly. That’s why annual wellness visits are an important part of your Medicare coverage. This guide will help you understand your annual wellness visit, including who’s eligible for it, and how to schedule and take advantage of this coverage. Let’s get started! Medicare Wellness Exam Eligibility There are two times you are eligible for a Medicare wellness exam. The first time is when you first enroll in Medicare. You are entitled to a “Welcome to Medicare” preventive visit within the first 12 months after you enroll in Medicare Part B. You will need to choose a medical provider that is enrolled in Medicare and accepts assignments. For your first preventive visit, your Medicare Part B costs do not apply unless the doctor performs tests or services that aren’t covered under preventive benefits. After your Welcome to Medicare visit, you are eligible for a Medicare wellness exam once every 12 months. This is a visit that allows you to create or update your personal plan to prevent disease and disability. This wellness exam does not cost you anything unless the doctor performs tests or services that aren’t covered under preventive benefits. Annual Wellness Visit CoverageWhat is a Medicare wellness visit? What can you expect at your annual visit? You’ll start by filling out a questionnaire known as a “Health Risk Assessment.” This will help you and your doctor work together to create a personalized prevention plan. The goal is to help you stay healthy, understand your risk factors, and help detect any problems early.What is Included in an Annual Medicare Wellness Visit?After you’ve done the questionnaire, it’s time to review the results. Some of the things you might discuss include:Medical historyCurrent medicationsYour current weight and blood pressure, and how to keep them in a healthy rangeTesting for and detection of cognitive impairmentsRisk factors and ways to address themCreating a schedule for preventive care, such as vaccinations and screeningsYou’ll leave the annual wellness visit aware of your current health and the steps you can take to improve or maintain your good health. Medicare Wellness Exam CostsHow much does it cost to have a wellness visit? Most of us don’t have a lot of extra money, so it’s important to understand the costs of these visits.Does Medicare Pay for a Wellness Checkup?In most cases, it doesn’t cost anything. Your Part B deductible and coinsurance do not apply for normal preventive benefits and your personalized prevention plan. However, if your doctor provides additional tests and services during the visit that are not part of the preventive benefits, you may have your normal Part B deductible and coinsurance. Those services turn the visit into a normal doctor’s appointment, instead of a wellness visit.Medicare Annual Wellness Exam: Related QuestionsThere are a lot of common questions that Medicare beneficiaries have about wellness visits. Here are several that might help you better understand this important benefit.Is An Annual Wellness Visit Required by Medicare?Do you absolutely have to go to an annual wellness visit? The good news is that it is optional. However, it’s very helpful and can put you on a path to better health and give you a better understanding of your risk factors.Can You Refuse a Medicare Wellness Visit?Because your Medicare Wellness Visits are not mandatory, you can definitely refuse them. However, you’ll miss out on creating a personal prevention plan that takes into account your current health and risk factors. That might mean that you don’t avert health problems that are preventable.Do Medicare Advantage Plans Cover Annual Wellness Visits?Medicare Advantage plans, which are full replacements for Original Medicare, are required to offer at least as much coverage as Original Medicare. That means you can expect a Medicare Advantage annual wellness visit. Generally, you’ll find an annual preventive appointment to be cost-free, but you’ll need to look at the specifics of your plan. Wellness in Medicare Advantage might provide more preventive care in your annual appointment than Original Medicare offers as well. You’ll need to check with your provider for details.Keep in mind as you schedule your annual wellness visit with Medicare Advantage, you will need to see a provider within the plan’s provider network to get cost-free care.Learn More About Medicare CoveragePreventing illness and addressing risk factors as early as possible is an important part of living a happy and healthy life. If you have additional questions about your Medicare coverage or need help comparing plans, contact us today!
Read More
  Many people who have Medicare rely on it as their only health coverage. However, some Medicare beneficiaries have other insurance alongside their Medicare coverage. Using Medicare with another type of insurance brings up a lot of questions, from “What insurance is primary or secondary?” to “Can I keep my employer's health insurance with Medicare?” This guide will answer many common questions about using Medicare alongside other insurance coverage. This will help you get a better understanding of how to maximize your benefits.   How Medicare Coordinates With Other Insurance Coverage If you have two different health insurance plans, it’s important to know which insurance plan will be the primary payment source. The other plan will provide backup for the costs that the first plan doesn’t cover. Understanding how Medicare works with other insurance plans can help you decide when to bring your Medicare health insurance card and when to bring your other plan information instead.  What Insurance is Primary or Secondary?When you have more than one payer — that is, more than one health insurance plan — there are rules that determine which plan is the first payer. That plan is considered primary, and then the other plan is secondary.When you have a health need, the primary plan provides coverage to the limits of its benefits and the secondary plan only pays if there are costs not covered by the primary plan.However, that doesn’t mean the secondary plan will pay all remaining costs. For example, you may have out-of-pocket costs like coinsurance or a copayment, or the services might not be part of what the secondary plan covers.When Medicare is working with other insurance plans, Medicare is usually the secondary payer. If you have an employer group plan from your job or your spouse’s job, that plan pays first. Here are some examples of Medicare working with other insurance, along with who pays first. If you have Medicare and:A group plan through your current job: The group plan pays first.A group plan through your spouse’s job and the company has more than 20 employees: The group plan pays first.A group plan from a previous employer that you have retired from: Medicare pays first.VA coverage: You use your VA benefits at VA providers and Medicare at other providers. Learn more about how Medicare works with VA benefits. Active-Duty TRICARE: TRICARE pays first.Non-Active-Duty TRICARE: Medicare pays first unless you use a military hospital or federal care provider.Medicaid: If you are dual-eligible for Medicare and Medicaid, Medicare pays first. How Does Medicare Work With Employer Health Insurance?The most common situation that people 65 and older are in when they have two insurance plans is this: they qualify for Medicare but they also have employer-provided health insurance. People aren’t necessarily retiring at age 65 anymore, which is why this happens. But don’t worry, your employer group plan will pay for your health benefits. If you go beyond those benefits, you can see if Medicare can provide additional coverage. Do I Have to Enroll in Medicare if I Have Employer Coverage?It’s a good idea to enroll in Medicare Part A (hospital coverage) as soon as you’re eligible. It’s premium-free for most Americans. However, if you have a qualifying group plan through an employer, you can delay your enrollment in Medicare Part B without paying the late-enrollment penalty. Another option is to drop your employer-based coverage and use Medicare instead. You’ll have to compare the coverage options and determine which is best for you. Can I Keep my Employer Health Insurance With Medicare?Some people worry that if they become eligible for Medicare they cannot keep their employer's health insurance. That’s not true! You don’t have to use government health insurance right away if you have other coverage. In fact, if you’re worried about the Medicare coinsurance costs, it might be best to keep your employer health insurance plan as the primary payer. That way, you can pay a set copayment or coinsurance amount, which can be more manageable than paying 20% of the Medicare-approved amount of care.Learn More About Medicare PlansAs you can see, you can have both Medicare and another health insurance plan. It’s just important to know which plan is the primary payer so you can ensure your bills are processed in a timely manner.Do you have more questions about Medicare plans and how they work in your specific situation? We’re here to help. Our licensed agents can address your concerns and help you compare plans to get the right coverage for your needs. Contact us today!
Read More
(800) 596-1715 (TTY 711)
Talk to a licensed insurance agent
Mon.-Fri. 8am - 8pm ET
Privacy PolicyTerms of UseCalifornia Privacy NoticeDo Not Sell My InfoInterpreter ServicesNotice of Nondiscrimination
GENERAL DISCLAIMERS
Healthinsurance.com, LLC is a commercial site designed for the solicitation of insurance from selected health insurance carriers. It is not an insurer, an insurance agency, or a medical provider. Insurance agency services may be provided by one of our sister companies, Total Insurance Brokers, LLC, TogetherHealth Insurance, LLC, HealthPlan Intermediaries Holdings, LLC, or HealthPocket d/b/a AgileHealthInsurance Agency, which are all part of the Benefytt Technologies, Inc. family of companies.
Alternatively, you may be referred, via a link, to a selected partner website, which is independently owned and operated and may have different privacy and terms of use policies from us.
If you provide your contact information to us, an insurance agent/producer or insurance company may contact you.
If you do not speak English, language assistance service, free of charge, is available to you; contact the toll-free number listed above.
For a list of all available plans, please contact 1-800-Medicare(TTY users should call 1-877-486-2048) or consult www.medicare.gov.
This site is not maintained by or affiliated with the federal government's Health Insurance Marketplace website or any state government health insurance marketplace.
MULTIPLAN_TGHBFYTQEN_2022
© 2021 HealthInsurance.com LLC