How Part D & Formularies Work

If you have Medicare, prescription drug coverage doesn't come automatically and understanding how it works can save you real money. Let's start with the basics.

What is Medicare Part D?

Medicare Part D is optional prescription drug coverage available to anyone with Medicare. You can get it two ways: a stand-alone Prescription Drug Plan (PDP) paired with Original Medicare, or bundled inside a Medicare Advantage plan.

Either way, Part D is offered through private insurance companies approved by Medicare, and each company's plan can look quite different.

What is a Formulary?

Every Part D plan has a formulary: its official list of covered drugs. Think of it as the plan's master drug list. If your medication is on the formulary, the plan helps pay for it. If it isn't, you may be paying full price.

Formularies include both brand-name and generic drugs. By law, every plan must cover at least two drugs in each major drug category, and all plans must include drugs in certain "protected classes."

• This includes medications that treat conditions like cancer, HIV/AIDS, depression, epilepsy, and organ transplant rejection that must be covered regardless of which plan you choose.

Beyond those requirements, plans have significant flexibility to decide what else they cover, which is why formularies can vary quite a bit from one plan to another.

Can a Formulary Change?

Yes, and this is important to know. A Part D plan can update its drug list during the year when drug therapies change, new drugs become available, or new medical information comes out. If a change affects a drug you're currently taking, your plan is required to notify you.

This is one of the key reasons it's worth reviewing your coverage each year during Medicare Open Enrollment (Oct. 15 – Dec. 7), rather than assuming your current plan still works the same way it did last year.

The Benefit Consultants at SGIA Medicare Consulting can walk you through this process to ensure your plan is affordable and covers your medications.

What if Your Drug Isn't on the Formulary?

In most cases, a similar drug in the same class should be available on your plan. If not, you and your prescriber have options and we'll cover those in the weeks ahead.

Next week we will review how plans organize drugs into tiers and what that means for what you actually pay at the pharmacy.

Have questions about your Part D coverage? Your SGIA Benefit Consultant is here to help you every step of the way. Call us today at 888-284-3314 or visit sgiamedicare.com.