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medicare part d

How To Pick a 2022 Medicare Part D Plan (And Tips To Avoid The Donut Hole)

Shopping for your Medicare Part D plan for 2022?

Understanding and picking a plan can be confusing. (Actually ALL of Medicare can be confusing. But we’re just going to focus on Part D in this article.) But we’re here to help simplify things and give you some tips for picking the best plan for you in 2022.

The Basics of Medicare Part D

Let’s just start with the basics here. Medicare Part D plans cover prescription medications.

If you have Original Medicare (Part A & B) you can add a Part D plan to get coverage for a wide range of generic and brand name prescription drugs that Original Medicare does not cover.

If you have a Medicare Advantage plan (Part C), it will often include drug coverage as part of your plan. (In fact, you cannot have Part C and Part D plans at the same time. Just one or the other.)

Shopping For a New Part D Plan

You can shop for a new Part D plan each year. And, in fact, it’s a good idea to do just that.

Plans change. Your needs change. So it often pays to see if there are better plans out there for you during the enrollment period.

Below you’ll find tips on how to pick a new plan in 2022, updated Part D costs for this year, plus an overview of the dreaded “Donut Hole” and how to avoid it.

Part D in 2022

Medicare Part D plans will differ a bit in their costs (premiums, copays, etc.), the drugs they cover and a few other things. However, the 4 phases of coverage, and the dollar levels at which they each kick in, are standard for every Part D plan.

Let’s look at the different phases of Part D and key details of each for 2022.

Deductible Period

The first phase of a Part D plan is the Deductible Period. This deductible is how much you’ll pay out-of-pocket for meds each year before your insurance kicks in. The highest the deductible can be is $480 in 2022. Many plans will have a $480 deductible, but others may have lower ones.

The exception here is for generic drugs (usually part of Tier 1 or Tier 2 drugs). For these there is usually a $0 deductible so you won’t have to pay for them out-of-pocket.

Initial Level Coverage

Then there is Initial Level Coverage. This is where you pay a copay or coinsurance amount for your prescriptions. How much you pay will depend on which tier your med(s) falls under. And it will vary from plan to plan. This is why it’s so important to use your personal drug list when you shop for a new plan each year.

In 2022, the Initial Level Coverage applies so long as the retail costs of your meds are under $4,430. When your costs are under that amount, you’ll only have to pay your copay/coinsurance.

Almost 90% of plan participants remain in this level each year.

Coverage Gap (aka the dreaded “Donut Hole”)

For the little over 10% of people who get to that $4,430 level in 2022, they’ll enter the Coverage Gap phase. This is also known as the Donut Hole.

Pretty much the only people who get to this level are the ones who need expensive, brand name prescriptions.

What costs count toward reaching the $4,430 level? Basically it’s your deductible and the full retail costs of drugs you paid in the Initial Level Coverage.

Your premiums, medications that aren’t covered or ones you’ve paid cash for don’t count.

If you reach the Coverage Gap, you may see a big jump in your prescription costs. In this phase, instead of a copay, you’ll pay 25% of the cost of your prescriptions.

So, if you take a drug that costs $1,000 a month, you’ll have to pay $250 instead of a $40 copay (or whatever your copay amount is).

(Quick note here… if you take insulin, there is just a flat $35 copay even if you’re in the Coverage Gap.)

We’ll have some tips on how to avoid this Donut Hole in a minute. But first, let’s look at the 4th phase of Part D.

Catastrophic Coverage

Those who end up with over $7,050 in drugs costs in 2022 will end up in the Catastrophic Coverage phase.

The costs that go in to determining this are deductibles, copays/coinsurance, the full cost of brand name drugs in the Coverage Gap and how much you pay for generics in the Coverage Gap.

Collectively these costs are called True Out of Pocket Costs (or Tro-oP). Once Tro-oP goes over $7,050 you’ll either pay 5% of the cost of your meds or pay $9.85 for brand name drugs or $3.95 for generics. Whichever is higher.

Tips To Avoid the Donut Hole

Again, almost 90% of Part D plan participants never reach the Donut Hole or Coverage Gap. If you think it may be an issue for you, here are some tips on how to avoid it.

1. Shop Part D plan each year. Do your research and look for plans that will reduce your out-of-pocket costs.

2. If possible, pay cash for lower cost generic medications. These don’t count toward the Coverage Gap.

3. Look to get a pharmacy discount card and/or online coupons that will give you discounts on your prescription meds.

How To Find the Best Part D Plan in 2022

There are a lot plans out there. So how do you find the best ones? Here are a few tips…

1. Use the Plan Finder on the website

Here you can type in all the drugs and dosages you take and the select pharmacies near you that you like going to.

It will bring up a list of plans which you can sort by lowest drug + premium costs. This will let you easily see which plans have the lowest out of pocket costs for you.

You can click on each plan to get more details about individual drug costs, how much they’ll cost at different pharmacies, view any quantity limits, see if you’ll need prior authorization and more.

There are also Star Ratings for each plan which gives you a measure of the plan’s quality and performance.

You can find the tool here.

2. Find a Medicare insurance agent

If this is all overwhelming for you, there are people who specialize in helping seniors find the best Medicare plans. They can help walk you through the process and get the best plan for your situation. You can find a list of Medicare insurance agents near you here.

3. Use Online Tools

Besides the Plan Finder there are other online tools and resources and companies that are designed to help seniors find the best Medicare Part D plans.

Bottom Line

Picking a Medicare Part D can be overwhelming and confusing. But there are tools and resources available to help you make the best choice for you. Just be sure to evaluate plans based on your specific prescription drug needs and look at the total annual cost estimates for each plan you consider.

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