What is Medicare Part D? Understand key terms
Navigating the ins and outs of Medicare can be a challenge if you’re not familiar with certain terms.
Medicare Part D, which helps pay for prescription drug costs, has its own set of terminology. You can purchase a standalone Medicare prescription drug plan or opt for prescription drug coverage as part of a Medicare Advantage plan.
With Medicare Annual Enrollment running from Oct. 15 to Dec. 7, now is a good time for a refresher on some key terms to help inform your coverage decisions for 2027.
What is a drug deductible, copay and coinsurance?
A drug deductible is the amount you may have to pay for covered prescription drugs each plan year before your plan begins paying its share. Depending on the plan, the deductible may apply to all drug tiers or only certain tiers.
What is a copay?
Some plans charge a copay, which is a set amount (for example, $8) you may be required to pay as your share of the cost of a covered drug.
What is coinsurance?
With coinsurance, you pay a set percentage (for example, 20%) as your share of the cost of the covered drug.
Together, deductibles, copays and coinsurance are also known as “cost-share.” Like deductibles, copay and coinsurance amounts can vary from plan to plan, and a plan’s copay and/or coinsurance amounts may vary by drug tier.
What is a formulary?
A formulary is a list of the prescription drugs covered by a Part D plan. When considering a plan that covers prescriptions, review the plan’s formulary to help make sure your drugs are covered.
What are the drug tiers?
A Part D formulary is typically grouped into tiers. The number of tiers may vary from plan to plan. Generally, drugs in a lower tier will cost less than drugs in a higher tier. Lower tiers commonly include preferred generic drugs and may have low to no cost-sharing.
Higher tiers generally include brand-name drugs and specialty drugs and tend to have higher cost-sharing. If you’re taking a brand-name drug, ask your provider if there’s a generic option that could work for you.
What is a preferred pharmacy?
Some Part D plans have preferred pharmacies in their network that offer covered Part D drugs for lower out-of-pocket costs than what you might pay at a non-preferred or “standard” pharmacy. If you use a preferred pharmacy, you may save money on your covered prescriptions. Make sure the plan offers access to pharmacies that are convenient for you.
What is a mail order pharmacy?
With mail-order pharmacy benefits, you may be able to get prescriptions conveniently delivered to your home for a lower cost share than purchasing from a retail location. You may also be able to save on prescription drug costs by ordering three-month supplies.
What is Extra Help?
Extra Help is a federal program that helps pay for some or most of the out-of-pocket costs of Part D coverage. It is also known as the Part D Low-Income Subsidy (LIS). If you meet certain income and resource requirements, you may be eligible for Extra Help.
Learn more
Now is a great time to start thinking about your healthcare and budget needs for the upcoming year. Whether you’ll be enrolling in Part D coverage for the first time, looking to change your coverage during Medicare’s Annual Enrollment Period, or helping a loved one make decisions, visit UHCMedicareHealthPlans.com to access resources to help you prepare and make confident choices.
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