Each year, there are changes to the Part D Prescription Drug Coverage of Medicare. We won't have visibility to the actual Part D Plans until October 1, but there are some structural changes that occur each year with Part D. Key updates for 2021 are below.
The government sets a maximum deductible amount for the Part D Plans. In 2020, the maximum deductible was $435. In 2021, this is increasing $10 to $445. On most of the Part D Plans, the deductible only applies to higher tiered drugs (e.g. Tiers 3, 4, 5). Also, some Part D Plans have a $0 deductible, or other amounts lower than the maximum deductible.
Initial Coverage Level
The Initial Coverage Level will increase $110 from $4,020 in 2020 to $4,130 in 2021. This amount is based on the Retail Cost of the Medication for the year (Calendar Year). Most people (about 85%) do not exceed the Initial Coverage Level and thus continue to pay their Copay/Coinsurance amount for the entire year. However, for the people that have very expensive medications that exceed the Initial Coverage Level, they will reach the Part D Coverage Gap, aka Donut Hole where they have to pay 25% the cost of their medications. The minor increase of $110 to the Initial Coverage level will have a minimal impact on Drug Costs in 2021. Basically, for those 15% of people with expensive medications, there will be a very slight delay to reaching the Part D Donut Hole which could save someone ~$20-$40 for the year.
True Out of Pocket Limit (Tro-oP)
The True Out of Pocket limit will increase $200 from $6,350 in 2020 to $6,550 in 2021. The Tro-Op is used to determine when someone exits the Part D Coverage Gap, aka Donut Hole, and moves into Catastrophic Coverage where they only have to pay 5% the cost of their medications. The increase of $200 in the Tro-oP only effects about 5% of people (those that would reach Catastrophic Coverage), and it creates a slight delay for when they will reach Catastrophic coverage. The net impact to this individual is likely less than $50 cost increase for the year.
Click the video below for a more detailed explanation of these changes, including a detailed example for someone who reaches the Part D Donut Hole.
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