Medicare Prescription Drug Coverage and Medicare Advantage

What exactly is Medicare Part C? What exactly is Medicare Part D? What do Medicare Advantage Plans entail? What are Medicare Advantage plans and how do they work?


– Another option for beneficiaries to obtain Medicare coverage

– A Medicare-approved health plan that is part of the Medicare program.

– Also known as Medicare Part C.

– Managed by private companies that have contracts with Medicare

– Medicare (CMS) pays the plan amount for the care of each enrolled member.

– The beneficiary retains all his or her Medicare rights and protections.

– The beneficiary continues to receive original Medicare (Parts A and B) covered services.

– Prescription drug coverage may be included in the plan.

– Additional benefits, such as vision and/or dental, may be included.

– Benefits and cost-sharing arrangements may differ.

– The beneficiary is not eligible for a Medigap policy.


Beneficiary must meet the following requirements: 

– Reside in the plan’s service area – have Medicare Parts A and B

– Not be incarcerated – Be a U.S. citizen or lawfully present in the United States – Be a member of only one plan at a time – Provide necessary information – Obey plan rules

Part C Medicare Advantage Plan Types:

– SNP (Special Needs Plan) ; HMO (Health Maintenance Organization) ; Medicare Medical Savings Account (MSA)

– HMO Point-of-Service Plan (HMOPOS) ; Preferred Provider Organization (PPO) ; Private Fee-for-Service (PFFS) ; Preferred Provider Organization (PPO) ; Preferred Provider Organization (PPO) ; Preferred Provider Organization (PPO) ; Preferred Provider Organization (PPO) ; Preferred Provider Organization (PPO) – Preferred (PPO)


Difference between Original Medicare and MA Plan (Part C)

Prescription Drug Coverage: Part D

  • Available for all people with Medicare
  • Run by private companies that contract with Medicare

Provided through

  • Medicare Prescription Drug Plans (PDPs) (for beneficiaries who have Part A and/or Part B)
  • Medicare Advantage Plans (MA-PD) (for beneficiaries who have Part A and Part B)


Part D must include range of drugs in each category and cover all drugs in 6 protected classes:

  • Anti-psychotics
  • Anti-depressants
  • Anti-convulsant
  • Immunosuppressants
  • Cancer drugs
  • HIV/AIDS Drugs

Some drugs are excluded by law from Medicare. Plans do not have to cover:

  • Anorexia, weight loss or weight gain drugs
  • Erectile dysfunction drugs when used for the treatment of sexual or erectile dysfunction
  • Fertility drugs
  • Drugs for cosmetic or lifestyle purpose (hair growth)
  • Drugs for symptomatic relief of coughs and colds
  • Prescription vitamin and mineral products (except prenatal vitamins and fluoride preparations)
  • Non-prescription drugs

Prescription Drug Plans manage access to drug coverage through:

  • Formulary: A list of prescription drugs covered by the plan

May have “tiers” that cost different amounts

  • Prior Authorization: Doctor must contact plan for prior authorization before prescription will be covered. Must show medical necessity for that drug.
  • Step therapy: Beneficiary must first try a similar, less expensive drug. Type of prior authorization. Doctor can request an exception.
  • Quantity Limits: Plans may limit quantity of drugs they cover. Over a certain period for reasons of safety and/or cost.


  • Network pharmacies: Medicare drug plans have contracts with pharmacies that are part of the plan’s “network”.
  • Preferred Pharmacies. Prescription drug costs may be less at a preferred pharmacy.
  • Mail-order Programs. Some plans may offer a mail-order program that allows to get up to a 3-month supply of covered prescription drugs sent directly to member’s home.
  • 2- or 3-month retail pharmacy programs. Some retail pharmacies may also offer a 2 or 3month supply or covered prescription drugs

Penalty for not signing up when first eligible:

  • 1% of national base beneficiary premium for each full month eligible and not enrolled
  • Multiply percentage by base beneficiary premium ($33.37 in 2022)
  • For as long as beneficiary has Medicare Part D

Penalty exceptions:

Extra help

Creditable coverage:

  • Current or past prescription drug coverage
  • Creditable if it pays and covers, on average, as much as Medicare’s standard drug coverage
  • Plans inform beneficiaries yearly about whether creditable

Prescription Drug plans work via the system of Annual Deductible, Initial Coverage, Coverage Gap or Donut hole and Catastrophic Coverage.


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