Understanding The Four Periods of Part D Coverage

Health care is very important to all of us. However, when someone has reached a certain age it can be hard to come up with a plan that will ensure they are being well taken care of. Assisted living and nursing home coverage can be very helpful to the families of the aging population since they provide a great level of support for full-time care. This is essential for safety and comfort. 

As we get older we start thinking about retirement and what type of lifestyle we are going to have when we retire. For many, this means planning for assisted living. But, with the current health system, it is getting more and more difficult to secure a plan that can meet your assisted living needs. With that in mind, this blog idea explores some of the different aspects of assisted living and how you can check for coverage.

If you’re looking to get Medicare coverage for your assisted living or nursing home costs, you’re probably looking into getting additional coverage, typically a Medicare Advantage plan, often called Part D. Let’s look at the four different periods of Part D coverage.

Deductible Period

If you already have prescription drug coverage, then your plan will begin covering the cost of your drugs once you’ve met the deductible. As an original Medicare enrollee, you will pay the full price of your prescriptions once you meet the deductible. The plan will cover 50 percent of the cost once you have satisfied a total yearly out-of-pocket spending amount specified by the plan.

You must meet a deductible with many prescription drug plans. This means you must spend a certain amount on prescription medications before the plan starts doing its part. Without a deductible, you might be spending money on your prescriptions but the plan will not pay anything until another time. Remember, this doesn’t matter if you have a Medicare Advantage Plan. In this case, you pay a premium to the plan and it will pay for your prescriptions once you have spent the yearly out-of-pocket amount.

Initial Coverage Period

After you meet your deductible, the plan will help pay for your covered prescription drugs. You will have to pay some of the cost, and you will need to make a copayment or coinsurance. The length of this phase depends on how much the monthly prescriptions cost and what type of benefits your plan offers. Typically, in 2018, the length is anywhere from 3–6 months depending on what type of medication(s) are needed.

Many times, your prescription drugs are covered in full until you meet the deductible for your insurance. However, after you meet that amount, the insurance plan will cover a portion of the drug cost. Typically, they will cover a percentage of the costs in the form of a copayment or coinsurance. Although many people are under the impression that the plan will cover the cost of the drug in full until the deductible is met, this is not the case. When you meet your deductible, you will have to pay for the drug until you have met the annual amount the plan has determined you will need to pay out of pocket before the plan begins to cover 100% of your drug costs.

Coverage Gap

Each year, you pay less and less for covered generic drugs until you reach a certain amount. You pay nothing when you enter the coverage gap (discount level 4), also known as the donut hole. In 2020, each brand-name prescription drug will be on its own separate tier until the deductible has been met and all of your drugs are in coverage gap level 1 (in which you pay 5% of your total cost for generics. For brand names entering the coverage gap in 2020 or later, instead of being in discount level 4, they will be in discount level 2 (where you pay 25% of the cost).

Catastrophic Coverage

In all Part D plans, after you reach $6,550 of your own out-of-pocket cost for covered drugs during the year, you enter catastrophic coverage. Dealing with insurance coverage can be tricky at best and confusing to others – especially since there is a lot of room for error here. The most important thing to make sure of is that you’re only paying what you should have paid initially as well as anything related to incidentals from your end by drawing up contracts with other key people who may or may not include third party experts but it doesn’t matter because when the time comes to pay them back they will still be well within their means come to the end of their fiscal calendar year.

Some costs that do not count toward reaching catastrophic coverage include your monthly premium, what your plan contributes toward certain drugs, the cost of non-covered drugs, the cost of covered drugs bought from outside an insurance company’s network (we call these out-of-network drugs), and the difference between generic and brand-name drug prices (most plans charge more for brand-name drugs than they do for generics). During catastrophic coverage, you pay $3.70 for the price of a generic drug or $9.20 for a brand-name drug (whichever is higher) – that’s 5% of the cost total.


Your Part D plan should keep track of how much money you have spent out of pocket for covered drugs and your progression through the coverage periods. And it’s important to review this information on a monthly basis so that you can make sure that the medications written into your monthly routine’s recipe book are still current.

People can sometimes be unclear on the four main periods of the Part D plan. It doesn’t matter how good you are at math, it’s important to understand the coverage plans that Medicare has to offer during each respective period so that your money isn’t being thrown out the window every month. Although some options might seem better than others, by understanding these exact differences you can start saving money right away and get exactly what you need for your specific situation.

Health insurance is important in today’s times. We offer free consultations for Medicare Supplements, Prescriptions Plans, and Medicare Advantage plans by our professional healthcare insurance agents at Healthbridge Insurance Solutions Palm Desert. Call us today to book an appointment with one of our professional health insurance consultants!