Part D MODULE 3

What is Medicare Part D?

Medicare prescription drug coverage for certain prescription drugs, insulin, diabetic supplies, and vaccines.

How is Part D coverage provided?

Only through private companies; there is no fee-for-service Part D benefit.

What is a PDP?

A Stand-Alone Prescription Drug Plan that provides Part D drug coverage.

What is an MA-PD?

A Medicare Advantage plan that also provides Part D prescription drug coverage.

What is a Cost-PD?

A Medicare Cost Plan that offers Part D drugs as an optional supplemental benefit.

What other Medicare plan includes Part D?

PACE plans.

Who is eligible for Part D?

People entitled to Part A and/or enrolled in Part B, except Part B solely for immunosuppressive drugs.

Who can generally enroll in a stand-alone PDP?

Beneficiaries in Original Medicare, MA MSA, PFFS, or Cost plans.

Where can an eligible beneficiary enroll in a PDP?

Any PDP offered in the area where they permanently reside.

Can a PDP deny an eligible applicant because of health status?

No. PDPs must enroll eligible beneficiaries regardless of health status.

How does an MA HMO or PPO beneficiary get Part D?

Through their HMO or PPO plan.

How does a PACE beneficiary get Part D?

Through the PACE plan.

What drugs does Part D cover?

Prescription drugs, biologics, insulin, related insulin supplies, and certain vaccines.

What are biologics?

Drugs made from natural sources such as humans, animals, or microorganisms.

What insulin supplies can Part D cover?

Syringes, needles, alcohol swabs, gauze, and certain insulin-delivery supplies.

Which vaccines are examples of Part D-covered vaccines?

Shingles, RSV, and Tdap vaccines not covered by Part B.

Are all prescription drugs covered by Part D?

No. Part D plans cover drugs included on their formulary.

Are weight-loss drugs normally covered by Part D?

No. Drugs for weight loss or gain are statutorily excluded.

Can GLP-1 drugs ever be covered?

Yes, when used for another covered indication such as diabetes; a 2026-2027 demonstration also covers certain weight-loss use.

What drugs are excluded from Part D?

Weight-loss/gain, fertility, cosmetic, cough/cold symptom drugs, most vitamins, erectile dysfunction drugs, OTC drugs, some off-label uses, and Part A/B drugs.

What is a formulary?

A Part D plan's list of prescription drugs it covers.

Who develops Part D formularies?

Pharmacists, doctors, and other experts.

How many drugs must generally be included in each therapeutic category?

At least two non-equivalent/non-bioequivalent drugs, subject to exceptions.

Must formularies include generic and brand-name drugs?

Yes.

What are protected classes?

Six drug classes that Part D formularies must include substantially all drugs from.

What are the six protected classes?

Antidepressants, antipsychotics, anticonvulsants, immunosuppressants, antiretrovirals, and antineoplastics.

What are cost-sharing tiers?

Formulary levels that group drugs according to the beneficiary's cost-sharing amount.

Which tier commonly contains generic drugs?

Tier 1.

Which tier commonly contains preferred brand-name drugs?

Tier 2.

Which tier commonly contains non-preferred brand-name drugs?

Tier 3.

Which tier commonly contains specialty/high-cost drugs?

Tier 4.

What should you check besides whether a drug is on a formulary?

The drug's cost-sharing tier.

What are the two broad types of Part D benefits?

Standard benefits and alternative benefits.

What is alternative Part D coverage?

Coverage that is not standard but is at least actuarially equivalent to standard coverage.

What does actuarially equivalent mean?

The value of the alternative Part D benefits is at least equal to standard coverage.

What are the two types of alternative coverage?

Basic alternative coverage and enhanced alternative coverage.

What is basic alternative coverage?

Actuarially equivalent coverage that provides the required basic prescription drugs.

What is enhanced alternative coverage?

Basic coverage plus enhancements for an additional monthly premium.

What enhancements can an enhanced plan offer?

Lower deductibles, coverage of excluded drugs, or lower initial-phase coinsurance.

What is the 2027 standard Part D deductible?

$700.

What does the beneficiary pay during the 2027 deductible phase?

100% of covered prescription drug costs up to $700.

What does the beneficiary generally pay during the 2027 initial coverage phase?

25% of prescription drug costs.

What is the 2027 Part D out-of-pocket threshold?

$2,400.

What happens after the beneficiary reaches the 2027 $2,400 threshold?

The beneficiary enters catastrophic coverage and pays $0.

What are TrOOP costs?

True Out-of-Pocket costs that count toward the annual Part D out-of-pocket threshold.

What does TrOOP generally include?

The deductible and beneficiary cost-sharing for covered Part D drugs.

What must generally be true for drug costs to count toward TrOOP?

The drug must be on the formulary and obtained from a participating network pharmacy.

Can some payments made by others count toward TrOOP?

Yes. Certain payments from programs, charities, HSAs, FSAs, and supplemental coverage can count.

Do payments under the Medicare Prescription Payment Plan count toward TrOOP?

Yes, when they are TrOOP-eligible costs.

Do OTC drug costs count toward TrOOP?

No.

Do non-Part D drug costs count toward TrOOP?

No.

Do out-of-network drug costs normally count toward TrOOP?

No, unless the plan's out-of-network coverage policy applies.

Do drug purchases outside the United States count toward TrOOP?

No.

Do manufacturer discount payments count toward TrOOP?

No.

What are network pharmacies?

Pharmacies contracted with a Part D plan to provide covered drugs.

What is a preferred pharmacy?

A network pharmacy offering lower cost-sharing than standard network pharmacies.

Can beneficiaries ever use out-of-network pharmacies?

Yes, in certain circumstances, potentially at a higher cost.

When might out-of-network pharmacy use be allowed?

Examples include losing medication while traveling or having limited access to network pharmacies.

Can Part D plans charge premiums?

Yes.

What generally happens when a Part D plan has a higher premium?

It typically has lower out-of-pocket costs.

What are the three ways to pay a Part D premium?

Automatic electronic payment, direct monthly billing, or SSA/RRB benefit deduction.

How long must a beneficiary generally keep their premium payment method?

For the entire year.

What is creditable prescription drug coverage?

Coverage expected to pay at least as much, on average, as standard Part D coverage.

When can a Part D late enrollment penalty apply?

When someone goes at least 63 continuous days without Part D or other creditable drug coverage after becoming eligible.

How is the Part D late enrollment penalty calculated?

1% of the national average beneficiary premium for each uncovered month.

How long does the Part D late enrollment penalty generally last?

As long as the beneficiary has Medicare prescription drug coverage.

Who is exempt from the Part D late enrollment penalty?

Beneficiaries who qualify for the low-income subsidy.

How can creditable employer coverage affect the Part D penalty?

Maintaining creditable coverage can allow later Part D enrollment without a penalty.

How long does someone generally have after losing creditable employer coverage to avoid a penalty?

63 days.

What is step therapy?

Requiring the beneficiary to try lower-cost drugs before another covered drug.

What is prior authorization?

The doctor must obtain plan approval before the plan covers the drug.

What are quantity limits?

Limits on how much of a drug the plan will cover during a specified period.

What is generic substitution?

Replacing a brand-name drug with a qualifying generic when permitted.

What are CARA programs?

Programs that can limit prescribers or pharmacies for beneficiaries at risk of drug misuse or abuse.

What is a transition refill?

A temporary supply of a drug that otherwise may not be covered under the new plan's normal rules.

Who can receive a transition refill?

Certain new enrollees, people switching plans, and enrollees affected by certain formulary changes.

How long is the transition period generally?

The first 90 days after enrollment, a plan switch, or qualifying formulary change.

How much transition coverage must generally be provided?

At least a one-month supply, unless a smaller amount was prescribed.

Do transition refills apply to new prescriptions?

No. They apply to drugs the beneficiary was already taking.

What rules are temporarily waived during a transition refill?

Prior authorization, non-safety-based quantity limits, and step therapy.

What is the Medicare Prescription Payment Plan?

A program allowing Part D cost-sharing to be spread into monthly payments.

What costs can the Medicare Prescription Payment Plan spread out?

Deductibles, copayments, and coinsurance.

When can a beneficiary opt into the Prescription Payment Plan?

At the beginning of the year or at any point during the year.

What does a participant pay at the pharmacy under the payment plan?

Nothing at the point of service for covered Part D drugs.

When do monthly payments begin?

After enrollment in the program and the beneficiary first incurs covered Part D out-of-pocket costs.

Who is more likely to benefit from the Prescription Payment Plan?

People with high out-of-pocket prescription costs early in the year.

Can a beneficiary opt out of the Prescription Payment Plan?

Yes, at any time.

What happens to unpaid amounts after opting out?

The beneficiary continues to be billed for outstanding cost-sharing amounts.

Does the Prescription Payment Plan change benefit phases?

No. It does not change movement through deductible, initial, or catastrophic phases.

Does the Prescription Payment Plan change TrOOP?

No. TrOOP treatment remains the same.

What is a coverage determination?

A decision about whether a Part D plan will cover a drug.

What is an appeal?

A request to review an adverse coverage decision.

What is a formulary exception?

A request to cover a non-formulary drug or make an exception to certain plan rules.

What is a tiering exception?

A request to have a formulary drug covered at a lower-cost tier.

What must generally accompany an exception request?

A supporting statement from the physician or prescriber explaining why it is necessary.

What is a grievance?

A complaint about a Part D plan or pharmacy.

What are examples of grievances?

Pharmacy wait times, missing requested materials, or excessive customer-service hold times.

Are drug coverage refusals grievances?

No. Coverage refusals and exception denials are handled through the appeals process.

What is LIS?

The Low-Income Subsidy, also called Extra Help, which helps with Part D premiums and cost-sharing.

Where can someone apply for Extra Help?

Through their State Medicaid office or Social Security Administration.