Plain version: what a person pays for drugs and which drugs are covered both depend on the plan chosen. Learn the cost words, the order of the coverage stages and how a formulary works.
Cost words and the deductible:
Premium: the monthly amount paid for coverage, whether or not any drugs are filled.
Copayment: a fixed amount paid at the pharmacy. Coinsurance: a percentage of the drug's cost.
Deductible: an amount paid each year before the plan starts to pay. Some plans have none, and Medicare sets a maximum for each year that no plan may exceed.
Part D runs on a calendar year, January through December, so the deductible and the stages start over each January.
Coverage stages: the CDI outline tests a design with a coverage gap. In that design the deductible comes first, then initial coverage, then the coverage gap, and catastrophic coverage applies last, once out-of-pocket spending reaches the yearly limit. Current Medicare.gov shows three stages with no gap: deductible, initial coverage and catastrophic coverage. Once out-of-pocket spending on covered drugs reaches the yearly limit, the enrollee pays nothing for covered Part D drugs for the rest of the calendar year. The monthly premium is separate and still applies.
The formulary: the CDI outline says insurance companies must create and annually file a formulary. Under current rules each plan has its own formulary, developed and reviewed by a pharmacy and therapeutics committee whose members are mostly practicing physicians and/or pharmacists, and approved by CMS. Sponsors submit bids each year for the next calendar year, and CMS will not approve a formulary design likely to discourage enrollment by certain people.
Tiers and minimum contents:
Tiers: many plans group drugs into tiers, and a drug on a lower tier generally costs the enrollee less. Each plan sets its tiers differently. If the prescriber believes a higher-tier drug is needed instead of a similar lower-tier one, the enrollee or prescriber can ask for a tiering exception, with a supporting statement.
Minimum: a formulary generally must include at least two Part D drugs in each therapeutic category and class (one if the class has only one drug), but it does not have to include every drug. For protected classes such as cancer and HIV/AIDS drugs, most drugs must be included.