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Understanding Medicare Prescription Drug Stages of Coverage
Understanding the Medicare Prescription Drug Stages of Coverage can at times seem difficult. Here are some definitions to help simplify what certain terms mean when used in your KelseyCare Advantage plan.
DEFINITIONS
Copay – A preset amount for which you are responsible for certain prescription medications.
Coinsurance – A preset percentage of the negotiated prescription medication cost for which you are responsible.
Drug Tiers – Different cost sharing levels to which drugs are assigned:
Tier 1: Preferred Generics
Tier 2: Non-Preferred Generics
Tier 3: Preferred Brands
Tier 4: Non-Preferred Drugs
Tier 5: Specialty Tier
Part D – The prescription medication coverage component of Medicare Advantage plans with drug coverage.
Total Drug Cost – Your prescription medication payments (copays or coinsurances) plus any payments made on your behalf by your Part D plan benefits.
Total Out of Pocket Cost – Any payments (copays or coinsurances) that you have made for your prescription medications or others (manufacturer discounts, patient assistance programs, etc.) made on your behalf. This does not include payments covered by your Part D plan benefits.
Year-to-Date – Any information gathered starting January 1st up to the current day.
It’s important for KelseyCare Advantage members with Medicare prescription drug coverage to understand how the different stages of coverage work to prevent paying more than anticipated for your Part D drugs.
Your Part D coverage will assist with covering a certain portion of the negotiated drug cost depending on the stage of coverage which you are in during the prescription fill. The coverage stage will also affect the copay or coinsurance amount for which you are responsible.
Stage 1 -
Yearly Deductible Stage
You will pay a yearly deductible of $100 on drugs placed on Tiers 3, 4 and 5. You must pay the full cost of those drugs until you fulfill the plan deductible. Tier 1 and 2 generic drugs are not subject to the deductible and you will begin the benefit year paying initial coverage stage (stage 2) copays for these products. There is no deductible for select insulins. You pay $30 - $35 for a 30-day supply of select insulins. Please refer to KelseyCare Advantage’s Formulary for further information about tier placement and cost sharing for select insulins.
Stage 2 -
Initial Coverage Stage
Once the deductible for drugs placed on Tier 3, 4 and 5 is fulfilled, you will enter the Initial Coverage Stage and depending on the tier placement of your drugs, you will be responsible for a copay or coinsurance. Please refer to KelseyCare Advantage’s Formulary for further information about tier placement and cost sharing. You stay in this stage until your year-to-date “total drug costs” reach a total of $4,130.
Stage 3 -
Coverage Gap Stage or "The Donut Hole"
In this stage, you will pay 25% of the negotiated drug cost for generic and brand medications placed in Tier 3, 4 and 5. Copays for generic medications placed in Tier 1 and Tier 2 will remain the same as what you were responsible for during the initial coverage and deductible stages. There is additional gap coverage for select insulins. You pay $30 - $35 for a 30-day supply of select insulins. Please refer to KelseyCare Advantage’s Formulary for further information regarding prescription medications and associated tiers. You will remain in the Coverage Gap Stage until your year-to-date “out-of-pocket costs” reach a total of $6,550.
Stage 4 -
Catastrophic Coverage Stage
You enter catastrophic coverage when your year-to- date “out-of-pocket costs” reach a total of $6,550. During Stage 4, KelseyCare Advantage pays most of the cost for your drugs.
Members who are not participating in the Medicare “Extra Help” program can expect to pay:
- The greater of $3.70 or 5% for a generic medication regardless of drug tier.
- The greater of $9.20 or 5% for a brand medication regardless of drug tier.
You will stay in the catastrophic coverage stage for the remainder of the coverage year.
Please note, at the beginning of each plan year, all benefits will reset, and you will be placed back into Stage 1 or the deductible stage. Coverage limits may change yearly, please check your plan’s Evidence of Coverage (EOC) and Annual Notice of Change (ANOC) annually.