According to the Kaiser Family Founding (KFF), nearly 90% of Medicare-age adults reported taking at least one prescription medication in 2019. Over 54% reported taking at least four prescription medications. If you’re on Medicare, it’s important to know if Medicare covers your medications. Here’s what you should know about your coverage.
How Medicare covers medications you fill at the pharmacy
Most of the medications you take are probably filled at the pharmacy rather than administered at the doctor’s office or hospital. Prescriptions filled at the pharmacy are generally covered by Medicare Part D.
Part D plans are sold by private insurance companies. In 2021, the average, Medicare beneficiary has about 30 Part D plans to choose from.
Part D plans determine which drugs they cover on their formularies. You’ll want to enroll in the plan that covers all or most of your specific prescription medications in the most cost-effective way. You can use Medicare’s Plan Finder Tool to do this. You’ll have an opportunity at least once each year to change your Part D coverage during the fall Annual Election Period.
Part D plans use tiers to define cost-sharing structures. Tiers can vary by plan, meaning one drug may be in tier one on one plan and tier two on another. Carriers set the copays and coinsurance costs for each tier, so these vary by plan as well. For example, Carrier A may charge a $5 copay for a tier two drug, while Carrier B may charge a $10 copay for the same tier.
Many Part D plans have an annual deductible. However, you may not have to pay the deductible when you fill prescriptions in the lower tiers. It’s important to understand the details in your plan’s cost structure so you know how much your medications will cost.
While most prescriptions filled at the pharmacy fall under Part D, some fall under Medicare Part B. If the medication is administered by durable medical equipment (DME), such as an insulin pump, then that medication is filled at the pharmacy but covered under Part B.
How Medicare covers medications at the doctor’s office or emergency room
In addition to covering medications administered by DME, Medicare Part B may also cover medications administered at doctor’s offices or emergency rooms. Drugs that are administered by a medical professional in a medical setting are subject to Part B coverage. However, specific requirements will likely need to be met for Medicare to cover a Part B drug for you.
For example, Prolia, an osteoporosis injection, is only covered by Part B for women who have had a bone fracture related to osteoporosis. You will be responsible for the Part B deductible and 20% coinsurance if Part B approves your medication. Another example of a drug generally covered under Part B is intravenous chemotherapy administered in the outpatient department of a hospital.
An ER visit is a Part B service since you are considered an outpatient. Medications administered during your visit are subject to Part B coverage as well. In some cases, your Part D plan may cover self-administered medications in the ER.
You may also be considered an outpatient in non-emergency situations. If you are in the hospital but not formally admitted, your care and medications will still be Part B services.
How Medicare covers medications while admitted to a hospital
Medicare Part A covers your inpatient medical care. Therefore, medications administered during an inpatient stay are generally covered under Part A. For example, if you’re an inpatient receiving intravenous medications, those are covered under Part A.
However, Medicare Part A has a deductible that covers the first 60 days spent in the hospital as an inpatient. In 2021, this deductible is $1,484. Therefore, this deductible will cover all your Part A services in full but is required whether you spend three days as an inpatient or 60 days.
Part A will still cover your care for hospital stays lasting longer than 60 days, but you’ll owe a daily copay that increases on day 91. If your stay lasts longer than 150 consecutive days (or 90 days after your 60 lifetime reserve days are used up), then you’ll be responsible for 100% of the costs from then on.
A word about Medigap and Medicare Advantage plans
Medigap plans cover certain Part A and Part B expenses, such as deductibles and coinsurance. Therefore, if your medications are covered under Part A or Part B, and you have a Medigap plan, most of your cost-sharing could be eliminated.
Medicare Advantage plans are different in the way they take over your Part A and Part B benefits, leaving you with new cost-sharing. Medicare Advantage plans also generally have Part D coverage built-in. Therefore, Part A, Part B, and Part D drugs will all be billed to the same plan if you have a Medicare Advantage plan.
As you can see, Medicare covers medications in all forms but which part and how it covers them varies. It’s important to learn how Medicare covers specific medications so you can be prepared for the costs you’ll be responsible for.