Each plan negotiates with drug manufacturers and pharmacies. Your copays or coinsurance rates are based on your plan’s negotiated prices and Medicare guidelines.
The amount you pay for your medications also depends on how much you’ve spent so far this year on prescriptions through your plan, which adds an extra level of confusion. After paying a deductible, you’re in the initial coverage stage. This means you’re responsible for copayments and coinsurance for your medication until the total cost — what you paid and what your plan has paid — reaches a $4,430 limit in 2022.
At that point, you’ll reach the coverage gap, formerly known as the “donut hole.”
In the past, Medicare beneficiaries were responsible for 100 percent of their drug costs during this coverage gap. Now you’ll pay no more than 25 percent of the cost of your medications until your out-of-pocket costs for the year reach $7,050 in 2022.
When you reach that spending level, which is called the catastrophic coverage limit, your drug costs will drop significantly and you’ll pay no more than 5 percent of the cost of each of your drugs for the rest of the year.
People who take few prescription drugs may remain in the deductible stage or move only to the initial coverage stage each year. People who take several medications or expensive drugs may move into the coverage gap or catastrophic coverage stage.
The coverage stage cycle restarts at the beginning of each plan year on Jan. 1. Insurers that offer Part D plans explain specific drug costs and coverage in their Summary of Benefits or Evidence of Coverage materials.