CMS-10141 3d - Exhibit C: Example of Section 2 (Drug Payment Stage

2022 Part D EOB Exhibit C

EXHIBIT C. Examples that show different versions of Section 2
(drug payment stages)
NOTE: The examples in this exhibit are fictional. They have been designed to illustrate some
of the main variations in model language for Section 2 of the model Part D Explanation of
Benefits (EOB). These examples use numbers for the year 2022. For ease of illustration, the
amounts for out-of-pocket costs and total drug costs have been rounded.
PART 1. Examples 1-4: non-LIS, with a deductible and limited gap coverage .......................................................................................... 3
[Example 1: non-LIS, with a deductible and limited gap coverage, in the yearly deductible stage] ....................................................... 4
[Example 2: non-LIS, with a deductible and limited gap coverage, in the Initial Coverage Stage] ........................................................ 6
[Example 3: non-LIS, with a deductible and limited gap coverage, in the Coverage Gap] ..................................................................... 8
[Example 4: non-LIS, with a deductible and limited gap coverage, in Catastrophic Coverage] ........................................................... 10
PART 2. Example 5: non-LIS, no deductible and no gap coverage .......................................................................................................... 12
[Example 5: non-LIS, no deductible and no additional gap coverage, in the Initial Coverage Stage] .................................................. 13
PART 3. Example 6: non-LIS, brand-name/tier level only deductible and no gap coverage.................................................................... 15
[Example 6: non-LIS, brand-name/tier level only deductible and no gap coverage, in the Initial Coverage Stage] ............................. 16
PART 4. Examples 7-9: partial LIS, with a deductible ............................................................................................................................. 18
[Example 7: partial LIS, with a deductible, in the Yearly deductible stage] ......................................................................................... 19
[Example 8: partial LIS, with a deductible, in the Initial Coverage Stage] ........................................................................................... 21
[Example 9: partial LIS, with a deductible, in Catastrophic Coverage]................................................................................................ 22

2022 Part D EOB Exhibit C
PART 5. Example 10: full LIS, in a plan that has a deductible................................................................................................................. 23
[Example 10: full LIS, in a plan with a deductible, in the Initial Coverage Stage]................................................................................ 24

2022 Part D EOB Exhibit C

3

PART 1. Examples 1-4: non-LIS, with a deductible and limited gap coverage
(these examples begin on the next page)

2022 Part D EOB Exhibit C

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[Example 1: non-LIS, with a deductible and limited gap coverage, in the yearly deductible stage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible

STAGE 2
Initial Coverage

STAGE 3
Coverage Gap

STAGE 4
Catastrophic Coverage

• You begin in this payment stage
when you fill your first
prescription of the calendar year.
During this stage, you (or others on
your behalf) pay the full cost of
your drugs.

• During this payment stage,
the plan pays its share of the
cost of your drugs and you
(or others on your behalf)
pay your share of the cost.

• During this payment stage,
you (or others on your
behalf) receive a 70%
manufacturer’s discount on
covered brand name drugs
and the plan will cover
[insert if additional brand
gap coverage: “at least”]
another 5%, so you will pay
[insert if additional brand
gap coverage: “less than”]
25% of the negotiated price
on brand-name drugs. In
addition you (or others on
your behalf) pay [insert if
additional generic gap
coverage: “less than”] 25%
of the costs of generic
drugs.

• During this payment
stage, the plan pays
most of the cost for
your covered drugs.

• You generally stay in this stage
until you (or others on your
behalf) have paid $480 for your
drugs ($480 is the amount of your
deductible).
• As of 01/31/22 you (or others on
your behalf) have paid $200 for
your drugs.

• You generally stay in this
stage until the amount of
your year-to-date “total drug
costs” (see Section 3)
reaches $4,430. When this
happens, you move to
payment stage 3, Coverage
Gap.

• You generally stay in this
stage until the amount of
your year-to-date “out-of-

• You generally stay in
this stage for the rest of
the calendar year
(through December 31,
2022).

2022 Part D EOB Exhibit C

5
pocket costs” (see Section
3) reaches $ 7,050. When
this happens, you move to
payment stage 4,
Catastrophic Coverage.

What happens next?
Once you (or others on your
behalf) have paid an additional
$280 for your drugs, you move to
the next payment stage (stage 2,
Initial Coverage).

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[Example 2: non-LIS, with a deductible and limited gap coverage, in the Initial Coverage Stage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible

STAGE 2
Initial Coverage

STAGE 3
Coverage Gap

STAGE 4
Catastrophic Coverage

• You begin in this payment
stage when you fill your first
prescription of the year.
During this stage, you (or
others on your behalf) pay
the full cost of your drugs.

• During this payment stage, the plan
pays its share of the cost of your
drugs and you (or others on your
behalf) pay your share of the cost.

• During this payment stage,
you (or others on your
behalf) receive a 70%
manufacturer’s discount on
covered brand name drugs
and the plan will cover
[insert if additional brand
gap coverage: “at least”]
another 5%, so you will pay
[insert if additional brand
gap coverage: “less than”]
25% of the negotiated price
on brand-name drugs. In
addition you (or others on
your behalf) pay [insert if
additional generic gap
coverage: “less than”] 25%
of the costs of generic
drugs.

• During this payment
stage, the plan pays
most of the cost for
your covered drugs.

• You generally stay in this
stage until you (or others on
your behalf) have paid $480
for your drugs ($480 is the
amount of your deductible).
Then you move to payment
stage 2, Initial Coverage.

• You generally stay in this stage until
the amount of your year-to-date
“total drug costs” reaches $4,430.
As of 4/30/22, your year-to-date
“total drug costs” were $1,900. (See
definitions in Section 3.)

• You generally stay in this
stage until the amount of
your year-to-date “out-of-

• You generally stay in
this stage for the rest of
the calendar year
(through December 31,
2022).

2022 Part D EOB Exhibit C

7
pocket costs” (see Section
3) reaches $7,050. When
this happens, you move to
payment stage 4,
Catastrophic Coverage.

What happens next?
Once you have an additional $2,530
in “total drug costs,” you move to
the next payment stage (stage 3,
Coverage Gap).

2022 Part D EOB Exhibit C

8

[Example 3: non-LIS, with a deductible and limited gap coverage, in the Coverage Gap]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible

STAGE 2
Initial Coverage

STAGE 3
Coverage Gap

STAGE 4
Catastrophic Coverage

• You begin in this payment
stage when you fill your first
prescription of the year.
During this stage, you (or
others on your behalf) pay
the full cost of your drugs.

• During this payment stage,
the plan pays its share of the
cost of your drugs and you
(or others on your behalf)
pay your share of the cost.

• During this payment stage, you (or
others on your behalf) receive a
70% manufacturer’s discount on
covered brand name drugs and the
plan will cover [insert if additional
brand gap coverage: “at least”]
another 5%, so you will pay [insert
if additional brand gap coverage:
“less than”] 25% of the negotiated
price on brand-name drugs. In
addition you (or others on your
behalf) pay [insert if additional
generic gap coverage: “less than”]
25% of the costs of generic drugs.

• During this payment
stage, the plan pays
most of the cost for your
covered drugs.

• You generally stay in this
stage until you (or others on
your behalf) have paid $480
for your drugs ($480 is the
amount of your deductible).
Then you move to payment
stage 2, Initial Coverage.

• You generally stay in this
stage until the amount of
your year-to-date “total drug
costs” reaches $ 4,430. Then
you move to payment stage
3, Coverage Gap.

• You generally stay in this stage
until the amount of your year-todate “out-of-pocket costs”
reaches $7,050. As of 08/31/22
your year-to-date “out-of-pocket
costs” were $3,200 (see Section 3).

• You generally stay in
this stage for the rest of
the calendar year
(through December 31,
2022).

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9

What happens next?
Once you (or others on your
behalf) have paid an additional
$3,850 in “out-of-pocket costs,”
you move to the next payment
stage (stage 4, Catastrophic
Coverage).

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[Example 4: non-LIS, with a deductible and limited gap coverage, in Catastrophic Coverage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible

STAGE 2
Initial Coverage

STAGE 3
Coverage Gap

STAGE 4
Catastrophic Coverage

• You begin in this payment
stage when you fill your first
prescription of the year.
During this stage, you (or
others on your behalf) pay
the full cost of your drugs.

• During this payment stage,
the plan pays its share of the
cost of your drugs and you
(or others on your behalf)
pay your share of the cost.

• During this payment stage,
you (or others on your
behalf) receive a 70%
manufacturer’s discount
on covered brand name
drugs and the plan will
cover [insert if additional
brand gap coverage: “at
least”] another 5%, you
will pay [insert if
additional brand gap
coverage: “less than”]
25% of the negotiated
price on brand-name
drugs. In addition you (or
others on your behalf) pay
[insert if additional
generic gap coverage:
“less than”] 25% of the
costs of generic drugs.

• During this payment stage, the
plan pays most of the cost for
your covered drugs.

• You generally stay in this
stage until you (or others on
your behalf) have paid $480
for your drugs ($480 is the
amount of your deductible).
Then you move to payment
stage 2, Initial Coverage.

• You generally stay in this
stage until the amount of
your “total drug costs”
reaches $4,430. Then you
move to payment stage 3,
Coverage Gap.

• You generally stay in this
stage until the amount of
your “out-of-pocket costs”

• For each prescription, you pay
whichever of these is larger: a
payment equal to 5% of the cost
of the drug (this is called
“coinsurance”), or a copayment
($3.95 for a generic drug or a
drug that is treated like a generic,
$9.85 for all other drugs).

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11
reaches $7,050. When you
move to payment stage 4,
Catastrophic Coverage.

What happens next?
You generally stay in this
payment stage, Catastrophic
Coverage, for the rest of the
calendar year (through December
31, 2022).

2022 Part D EOB Exhibit C

PART 2. Example 5: non-LIS, no deductible and no gap coverage
(this example is on the next page)

12

2022 Part D EOB Exhibit C

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[Example 5: non-LIS, no deductible and no additional gap coverage, in the Initial Coverage Stage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible
(Because there is no
deductible for the
plan, this payment
stage does not apply
to you.)

STAGE 2
Initial Coverage

STAGE 3
Coverage Gap

STAGE 4
Catastrophic Coverage

• You begin in this payment stage
when you fill your first
prescription of the year. During
this stage, the plan pays its share
of the cost of your drugs and you
(or others on your behalf) pay
your share of the cost.

• During this payment stage, you
(or others on your behalf)
receive a 70% manufacturer’s
discount on covered brand name
drugs and the plan will cover
another 5%, so you will pay 25%
of the negotiated price on brandname drugs. In addition you (or
others on your behalf) pay 25%
of the costs of generic drugs.

• During this payment
stage, the plan pays
most of the cost for your
covered drugs.

• You generally stay in this stage
until the amount of your yearto-date “total drug costs”
reaches $4,430. As of 4/30/22,
your year-to-date “total drug
costs” were $1,900. (See
definitions in Section 3.)

What happens next?
Once you have an additional
$2,530 in “total drug costs,”

• You generally stay in this stage
until the amount of your year-todate “out-of-pocket costs” (see
Section 3) reaches $7,050. Then
you move to payment stage 4,
Catastrophic Coverage.

• You generally stay in
this stage for the rest of
the calendar year
(through December 31,
2022).

2022 Part D EOB Exhibit C

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you move to the next payment
stage (stage 3, Coverage Gap).

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PART 3. Example 6: non-LIS, brand-name/tier level only deductible and no gap coverage
(this example is on the next page)

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[Example 6: non-LIS, brand-name/tier level only deductible and no gap coverage, in the Initial Coverage Stage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.” How
much you pay for a covered Part D prescription depends on which payment stage you are in
when you fill it. During the calendar year, whether you move from one payment stage to the
next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible

STAGE 2
Initial Coverage

STAGE 3
Coverage Gap

• During this payment stage, you
(or others on your behalf) pay
the full cost of your brandname (or tier 3) drugs.

• During this payment stage, the plan pays
its share of the cost of your generic (or tier
1 and tier 2) drugs and you (or others on
your behalf) pay your share of the cost.

• You generally pay full cost of
your brand-name (or tier 3)
drugs until you (or others on
your behalf) have paid $480 for
your brand-name (or tier 3)
drugs ($480 is the amount of
your brand-name (or tier 3)
deductible).

• After you (or others on your behalf) have
met your brand-name (or tier 3)
deductible, the plan pays its share of the
cost of your brand-name (or tier 3) drugs
and you (or others on your behalf) pay
your share of the cost.

• During this payment
stage, you (or others on
your behalf) receive a
70% manufacturer’s
discount on covered
brand name drugs and
the plan will cover
another 5%, so you will
pay 25% of the
negotiated price on
brand-name drugs. In
addition you (or others
on your behalf) pay 25%
of the costs of generic
drugs.

• You generally stay in this stage until the
amount of your year-to-date “total drug
costs” reaches $4,430. As of 4/30/22,
your year-to-date “total drug costs” were
$1,900. (See definitions in Section 3.)

• You generally stay in
this stage until the
amount of your year-todate “out-of-pocket
costs” (see Section 3)
reaches $7,050. Then
you move to payment

STAGE 4
Catastrophic
Coverage
• During this payment
stage, the plan pays
most of the cost for
your covered drugs.
• When you are in this
stage, you generally
stay in it for the rest
of the calendar year
(through December
31, 2022).

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stage 4, Catastrophic
Coverage.

What happens next?
Once you have an additional $2,530 in
“total drug costs,” you move to the
next payment stage (stage 3, Coverage
Gap).

2022 Part D EOB Exhibit C

PART 4. Examples 7-9: partial LIS, with a deductible
(these examples begin on the next page)

18

2022 Part D EOB Exhibit C

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[Example 7: partial LIS, with a deductible, in the Yearly deductible stage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible
• You begin in this payment stage when
you fill your first prescription of the
year. During this stage, you (or others
on your behalf) pay the full cost of
your drugs.
• You generally stay in this stage until

you (or others on your behalf) have
paid $99 for your drugs. (The plan
deductible is usually $480, but you pay
$99 because you are receiving “Extra
Help” from Medicare.)

• As of 05/31/22 you have paid $50 for
your drugs.

What happens next?
Once you (or others on your behalf)
have paid an additional $49 for your

STAGE 2
Initial Coverage
• During this payment stage,
the plan pays its share of
the cost of your drugs and
you (or others on your
behalf, including “Extra
Help” from Medicare) pay
your share of the cost.
•

You generally stay in
this stage until the
amount of your yearto-date “out-of-pocket
costs” reaches $7,050.
When this happens,
you move to payment
stage 4, Catastrophic
Coverage.

STAGE 3

Coverage Gap
(Because you are
receiving “Extra Help”
from Medicare, this
payment stage does not
apply to you.)

STAGE 4
Catastrophic Coverage
• During this payment
stage, the plan pays most
of the cost for your
covered drugs.
• You generally stay in this
stage for the rest of the
calendar year (through
December 31, 2022).

2022 Part D EOB Exhibit C
drugs, you move to the next payment
stage (stage 2, Initial Coverage).

20

2022 Part D EOB Exhibit C

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[Example 8: partial LIS, with a deductible, in the Initial Coverage Stage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible
• You begin in this payment
stage when you fill your first
prescription of the year. During
this stage, you (or others on
your behalf) pay the full cost of
your drugs.
• You generally stay in this stage
until you (or others on your
behalf) have paid $99 for your
drugs ($99 is the amount of
your deductible). Then you
move to payment stage 2,
Initial Coverage.

STAGE 2
Initial Coverage
• During this payment stage, the plan
pays its share of the cost of your drugs
and you (or others on your behalf,
including “Extra Help” from
Medicare) pay your share of the cost.
• You generally stay in this stage until the
amount of your year-to-date “out-ofpocket costs” reaches $7,050. As of
08/31/22 your year-to-date “out-ofpocket costs” were $4,130 (see
definitions in Section 3).

What happens next?
Once you (or others on your behalf)
have paid an additional $2,920 in
“out-of-pocket costs” for your drugs,
you move to the next payment stage
(stage 4, Catastrophic Coverage).

STAGE 3
Coverage Gap
(Because you are
receiving “Extra
Help” from Medicare,
this payment stage
does not apply to
you.)

STAGE 4
Catastrophic Coverage
• During this payment
stage, the plan pays
most of the cost for
your covered drugs.
• You generally stay in
this stage for the rest of
the calendar year
(through December 31,
2022).

2022 Part D EOB Exhibit C

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[Example 9: partial LIS, with a deductible, in Catastrophic Coverage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible

STAGE 2
Initial Coverage

• You begin in this payment
stage when you fill your first
prescription of the year.
During this stage, you (or
others on your behalf) pay
the full cost of your drugs.

• During this payment stage,
the plan pays its share of the
cost of your drugs and you
(or others on your behalf,
including “Extra Help” from
Medicare) pay your share of
the cost.

• You generally stay in this
stage until you (or others on
your behalf) have paid $99
($99 is the amount of your
deductible). Then you move
to payment stage 2, Initial
Coverage.

STAGE 3
Coverage Gap
(Because you are
receiving “Extra Help”
from Medicare, this
payment stage does not
apply to you.)

STAGE 4
Catastrophic Coverage
• During this stage, the plan pays most
of the cost for your covered drugs.
• For each prescription, you pay up to
$3.95 for a generic drug or a drug
that is treated like a generic, and
$9.85 for all other drugs.

• You generally stay in this
stage until the amount of
your “out-of-pocket costs”
reaches $7,050. Then you
move to payment stage 4,
Catastrophic Coverage.

What happens next?
You generally stay in this payment
stage, Catastrophic Coverage, for the
rest of the calendar year (through
December 31, 2022).

2022 Part D EOB Exhibit C

PART 5. Example 10: full LIS, in a plan that has a deductible
The page that follows has an example that illustrates what the drug payment stages chart in
Section 2 looks like for someone with full LIS who is in drug payment stage 2 (Initial
Coverage). The purpose of this example is to show how the model language explains the
absence of a deductible for someone with full LIS who is in a plan that has a deductible.
(this example is on the next page)

23

2021 Part D EOB Exhibit C

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[Example 10: full LIS, in a plan with a deductible, in the Initial Coverage Stage]

SECTION 2. Which “drug payment stage” are you in?
As shown below, your Part D prescription drug coverage has “drug payment stages.”
How much you pay for a covered Part D prescription depends on which payment stage
you are in when you fill it. During the calendar year, whether you move from one
payment stage to the next depends on how much is spent for your drugs.

You are in this stage:
STAGE 1
Yearly Deductible
(Because you are receiving
“Extra Help” from
Medicare, this payment
stage does not apply to
you.)

STAGE 2
Initial Coverage
• You begin in this payment stage when you
fill your first prescription of the year.
• During this stage, the plan pays its share of
the cost of your drugs and you (or others
on your behalf, including “Extra Help”
from Medicare) pay your share of the cost.
• You generally stay in this stage until the
amount of your year-to-date “out-ofpocket costs” reaches $7,050. As of
08/31/22 your year-to-date “out-of-pocket
costs” were $4,130 (see definitions in
Section 3).

What happens next?
Once you (or others on your behalf) have
paid an additional $2,920 in out-ofpocket costs for your drugs, you move to

STAGE 3
Coverage Gap
(Because you are
receiving “Extra Help”
from Medicare, this
payment stage does
not apply to you.)

STAGE 4
Catastrophic Coverage
• During this payment
stage, the plan pays for
all your covered drugs.
• You generally stay in
this stage for the rest of
the calendar year
(through December 31,
2022).

2021 Part D EOB Exhibit C

25
the next payment stage (stage 4,
Catastrophic Coverage).