The law establishing Part D outlined a standard benefit that is used as the yardstick to measure the overall value a private plan must offer in order to be approved by Medicare. The private insurers participating in the program may structure their benefit differently, if the overall value is at least as good as the Medicare basic plan. For example, a plan may have higher premiums but cover more drugs, or offer reduced copayments, as long as the overall package of benefits is at least as valuable as the standard plan design. Regardless of their structure, however, plans may not impose a higher deductible ($480 in 2022) or require a higher out-of-pocket limit ($7,050 in 2022) than required by the standard benefit.
The monthly premiums plans will require beneficiaries to pay vary but the average basic premium is about $33 per month in 2022. In addition:
- The deductible is $480 per year.
- The beneficiary then pays 25 percent of the cost of the next $4,430 in qualified drug expenses.
- Once total spending by the beneficiary and the plan equals $10,690, catastrophic coverage begins and the beneficiary pays either five percent of qualified costs, or a copayment of $3.95 for a generic or preferred drug and $9.85 for other drugs, whichever is greater, for the remainder of the year. For costs in the coverage gap phase, beneficiaries will pay 25 percent for both brand-name and generic drugs, with plans paying the remaining 75 percent of generic drug costs.
Note that for 2022, very few Part D plans will offer a benefit that conforms exactly with the premium, deductible and prescription copayment amounts of the standard benefit.