Medicare Drug Plans (Part D) Known as the Medicare Prescription Drug Plan
Medicare Drug Plans - Part D ("Medicare & You" pages 97-112)
Medicare introduced Part D in January 2006. Part D is the designation given to the new Medicare Prescription Drug Plan (PDP) benefit offered through private insurance companies approved by Medicare and contracted annually.
There are two ways to get Medicare prescription drug coverage:
- Stand-alone Medicare Prescription Drug Plans - these are separate plans (sometimes called "PDPs") add drug coverage to Original Medicare, some Medicare Cost Plans, and some Medicare Private Fee-for-Service (PFFS) Plans.
- Within Medicare Advantage Plans (like an HMO or PPO) - these are plans that offer both Part A and Part B medical coverage along with prescription drug coverage. Medicare Advantage Plans with prescription drug coverage are sometimes called "MA-PDs".
If you decide not to join a Medicare drug plan when you're first eligible, and you don't have other credible prescription drug coverage, you will likely pay a late enrollment penalty.
There are three or four stages to every drug plan.
- The first stage is the Deductible phase, not all plans have a deductible, so you may not go through this phase. While in the deductible, you will pay full cost for your covered prescriptions until you reach the specific deductible amount. The maximum amount for the deductible in 2015 is $320.
- During the Initial Coverage phase, you will pay a specific co-payment for your covered drugs; the co-pays are based on tiers. The number of tiers ranges from four to six, depending on the carrier. When your actual drug cost reaches $2,970 (2015) you will go into the next phase.
- For example, your prescription’s full cost is $100 per month, but your co-pay is $10; the full $100 is being applied to the $2,970 threshold.
- The Coverage Gap also known as “The Donut Hole”: You will still receive a discount on your prescriptions, but your cost will be slightly higher than it was during your initial coverage phase.
- You will pay 45% for your plan’s covered name brand drugs and 68% for your plan’s covered generics while in the coverage gap.
- Once you have reached $4,550 (2014) in out-of-pocket cost, you will enter the final stage of the drug plan
- Catastrophic Coverage begins when the combined total cost for you and the manufacturer has reached $4,700. At this point you will pay $2.65 for covered generics or $6.60 for covered name brands or a 5% co-insurance, whichever is greater.
Because we represent a number of the carriers who offer Part D coverage, we can assist you in understanding Part D coverage and enrolling in a plan should you choose to do so.
Extra Help, through Social Security, is available for those with limited income and assets and will pay for all, or most of the monthly premiums, annual deductibles and prescription co-pays related to their plan. Many qualify for these big savings and don't even know it.
--More information is available in the Medicare and You booklet