In this example, it is January and we just started a new Medicare Part D plan year.
If your next purchase is another Tier 3 drug with a $143 retail cost and a copay of $47, you would first cover the $115 balance of your deductible (from Example 1), and then have $28 remaining ($143 retail price for this purchase - $115 deductible balance from the previous purchase). The $28 would “straddle” into the second phase of your Medicare Part D coverage (Initial Coverage Phase) where you have a $47 copay for this Tier 3.
Your cost-sharing would calculate to $162 the remainder of the deductible ($115) plus the copay for the initial coverage phase ($47), however . . .
Since you never pay more than retail ($143), your cost-sharing would be $143 rather than $162 because the retail price ($143) is less than the calculated cost-sharing of $162. Your next drug purchases will be completely in the Initial Coverage phase (your second phase of coverage) - and you will only pay your copay.
If you have a $115 balance remaining in your Initial Deductible (from Example 1) and you purchase a $370 Tier 3 drug that has a $47 copay, you would first cover the $115 balance to meet your $445 Initial Deductible. The remaining amount of the retail price $255.
- $115 (left over in Deductible from the last purchase)
$255 (goes into the Initial Coverage phase)
This $255 would carry over to the Initial Coverage phase. So this one purchase would "straddle" two phases of coverage. In this example, you have a $47 copay in the initial coverage phase.
We would calculate your cost-sharing as $162 — the remainder of the deductible ($115) plus the copay for the initial coverage phase ($47).
As you know from the last example, you never pay more than retail. But in this example, your calculated copay ($162) is less than the retail cost of your medication ($370), so your cost-sharing would be $162 ($115 + $47) for this purchase. Again, the $47 is the copay on the $255 remaining retail balance of the $370 drug purchase that falls or "straddles" from your Initial Deductible phase into the Initial Coverage phase.
Your next drug purchases will be completely in the Initial Coverage phase (your second phase of coverage) — and you will only pay your copay.
Some Medicare Part D plans exclude Tier 1 and Tier 2 drugs from the plan's Initial Deductible and these low-costing drugs are not impacted by your Initial Deductible and have immediate coverage as if you were in your plan’s Initial Coverage phase.
So, if you have a $445 standard deductible with Tier 1 and Tier 2 drugs excluded from the deductible, and you purchase a Tier 2 generic drug that has a retail price of $22 (with a copay of $3) – you pay only the $3 copay and your $445 deductible is not affected. You can click here to read more about Tier 1 and Tier 2 exclusions.
Since you have not met your $445 deductible, your first Tier 3 drug purchase should cost you $460 and straddle the Initial Deductible and Initial Coverage phases.
Your cost-sharing would be calculated by first covering the $445 Initial Deductible, the remaining $15 portion of the retail cost ($460 - $445) would carry over to your Initial Coverage phase where you have a $40 copay, making your calculated cost-sharing for this purchase $485 ($445 + $40).
This would mean that your cost-sharing would calculate to $485 the deductible ($445) plus the copay for the initial coverage phase ($40). But . . .
Since you never pay more than the drug plan’s retail cost ($460), and your cost-sharing would be $485, which is higher than the drug’s retail cost, you pay the retail cost ($460).
When you make your next Tier 3 drug purchase, you would be in the Initial Coverage phase and pay only the $40 copay.