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What are the Four Coverage Stages of Part D?

Medicare Part D is a standalone plan of the Medicare program that provides coverage for prescription drugs. Part D plans are sold by private insurers, so the drugs that are covered will vary among each plan.

However, Part D plans are mandated to cover drugs in certain categories such as immunosuppressants, antipsychotics, antidepressants, and cancer treatment drugs. They are also required to cover at least two drugs in other categories. 

There are also four coverage stages of Medicare Part D: The Deductible Stage, The Initial Coverage Stage, The Coverage Gap Stage, and the Catastrophic Stage.

Part D Coverage Stages

Deductible Stage

The first coverage stage of Medicare Part D is the deductible stage. Suppose you are enrolled in a Part D plan with a deductible. In that case, you’ll be required to cover the deductible before you start to receive coverage for your prescription drug costs. The deductible means you will pay the full cost of your prescription medications until you spend enough to meet the deductible.

However, suppose you enroll in a $0 deductible plan. In that case, you do not need to cover any deductible before you move to the next coverage stage.

The Initial Coverage Stage

This stage begins immediately if you are enrolled in a plan with no deductible or if you have made enough payments to meet your plan’s deductible. Under the initial coverage stage, the Part D plan pays part of the prescription drug costs as long as the drug is contained in the plan’s formulary and the cost is approved. You’ll be required to cover part of the costs as a copayment or coinsurance. Your out-of-pocket costs will depend on the tier level of the medication. The initial coverage stage will end after you meet the limit set by Medicare for that year.

Coverage Gap

The coverage gap is not open to everyone. However, if you enter this stage, the plan will cover 75% of covered brand name and generic medications while you’ll cover 25%. You will exit the coverage gap stage once your out-of-pocket expenses equal $6,550.

Catastrophic Stage

You will enter the catastrophic stage after your out-of-pocket expenses reach $6,650. During this stage, the plan will cover almost all the costs for the rest of the year while you pay a low copayment or coinsurance amount.

At Cornerstone Senior Advisors, we help you make informed decisions that fit your healthcare needs. Contact us today for more information about Medicare Part D and getting the proper prescription drug coverage.