Common Medicare Part D termsFormulary 

  • A formulary is a list of medications list of medications covered by a prescription drug plan. It usually includes tiers, or levels, of coverage based on how much the drugs cost. In general, the higher the drug price, the more the plan member must contribute to its purchase.

Deductible 

  • Members pay this amount before the PDP starts meeting the costs of covered medications. Not all PDPs have a deductible. For those that do, once the deductible is met, members must contribute plan-specified amounts in the form of copayments or coinsurance for their medications.

Copay 

  • a pre-determined dollar amount you pay as your portion of the cost of medication. While coinsurance is also an amount you pay as your share of services once a deductible has been met, it is most often a percentage, say 30%.

Late penalty 

  • This normally applies if you fail to sign up for a PDP within three months of becoming eligible for Medicare Part A or Part B and you don’t have creditable coverage such as through an employer, a union, or the U.S. Department of Veterans Affairs (VA). Medicare calculates the penalty by multiplying the percentage of the national base beneficiary premium and the number of months you delayed signing up. This can add up over time.

 

Read Next: Medicare Part D Coverage Gap
Find Out: What is Medicare Part D Cost?
Return to: Medicare Part D

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