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Medicare Part D Prescription Drug Coverage
What is Medicare Part D?
Medicare Part D prescription drug coverage, often referred to as Part D, is available to anyone who is also eligible for Original Medicare. You have to get Medicare Part D through a private insurance company that is contracted with Medicare to offer these plans. Different insurers offer different types of plans, so your cost for the plan (premium) and your out-of-pocket expenses for prescription drugs (copayments, coinsurance and deductible) will vary. You'll have to shop around to decide which plan is best for you.
Part D coverage typically works like this:
You pay a monthly premium to be covered under the plan
If the plan has a deductible, you pay the full amount of your prescription drug purchases until the deductible is met.
After you satisfy the deductible, you will pay a share of the costs according to your specific plan. That could include a flat amount (copayment) or a percentage of the total amount (coinsurance). You typically pay this amount directly to the pharmacist at the time of purchase.
After your Part D coverage has paid a certain amount for prescription drugs, you may have to pay all costs yourself up to a yearly limit. This is sometimes called a "coverage gap" or "donut hole." Read your Medicare prescription drug plan documents carefully to see if this applies to your plan. Not all plans have a coverage gap, and there are ways to help you fill this hole. See "Filling the donut hole" below for more about that.
Once you have paid $4,700 (in 2012) out of your own pocket for prescription drugs, you automatically get "catastrophic coverage." This means for the rest of that particular year, you would only pay a small copayment or coinsurance amount for prescription drugs.
Note that Medicare Part D coverage may differ from plan to plan. Some drugs (for example brand-name drugs vs. generic drugs) are covered at different levels. Each insurance company determines what drug is covered at which levels. The insurer will publish a prescription drug "formulary" that lists this information.
Who can get Medicare Part D coverage?
Everyone who is eligible for Original Medicare can get a Medicare prescription drug plan. You must live in the service area for the particular plan that you are considering and continue to pay your Part B premium, if applicable.
When to enroll in a Medicare Part D plan
Enroll in a Medicare prescription drug plan as soon as you are eligible. Be sure to enroll early so you have your ID card as soon as your coverage begins. If you don't join a Medicare Part D plan when you are first eligible, you may have to pay a late enrollment penalty when you do join. The penalty is waived if you qualify for and get "Extra Help" for low income individuals.
Your initial enrollment begins three months before you turn 65 years old and continues for seven months. After your initial enrollment, general enrollment occurs during the Annual Enrollment Period (AEP). In 2011 (for 2012 plans), this period will begin October 15 and last through Dec 7.
Do not let your prescription drug coverage lapse for 63 days or more. If you do, you may have to pay the penalty. You don't need prior prescription drug coverage to get Medicare Part D if you enroll when first eligible. But once you enroll in Medicare Part D, you must continue to have some form of "creditable" prescription drug coverage without a lapse.
Creditable coverage means you could have a prescription drug plan through any of the following:
- An employer or union group
- Indian Health Services
- Department of Veterans Affairs
- A private health insurer
Medigap policies and discount drug cards are not considered creditable coverage.
When you leave a creditable prescription drug plan, you should receive a letter or certificate showing the dates of your coverage. Keep this letter somewhere safe because you may need to prove that you did not have a lapse in coverage later.
How to get Medicare Part D coverage
If you have Original Medicare and want to keep it, you can get a Medicare prescription drug Plan (PDP) through a private insurer. This can be through a Medicare insurance agent or through an employer or union group.
If you have a Medicare Advantage Plan (Part C) or are considering this option, review the plan to see if it includes prescription drug coverage. If not, you may want to determine if you would like to obtain another coverage option that provides for both medical and prescription drug coverage.
Getting "Extra Help" for Medicare prescription drug plans
Generally for 2012, if you earn less than $16,335 (single) or $22,065 (married with no other dependents) you may qualify for the Medicare prescription drug low-income subsidy. Check the rules in your state as these amounts may be different for you. There are also restrictions on other cash resources, such as how much you have in checking or savings.
The Extra Help program helps you pay your monthly Medicare prescription drug plan premium and your out-of-pocket costs, such as copayments, coinsurance and deductibles. There is also no coverage gap or late payment penalties for those who qualify.
Some people automatically qualify for Extra Help. For example, if you have full Medicaid coverage, get help from your state Medicaid program for your Medicare Part B premium, or if you get Supplementary Security Income benefits. If you automatically qualify, you will receive a letter from Medicare and will not have to apply.
Filling the donut hole
The recent federal Health Care Reform legislation will reduce the doughnut hole gap over several years to make prescription drugs even more affordable. If you reach the coverage gap in 2011, you may get a 50% discount on brand-name prescription drugs when you buy them. There will be additional savings in the coverage gap each year through 2020, when the donut hole is closed completely. Medicare is planning other ways to fill the coverage gap in future years, so watch for other news about this. For more information, see "Bridging the Coverage Gap," available at http://go.usa.gov/loF or by calling 1-800-MEDICARE (1-800-633-4227), TTY users should call 1-877-486-2048.
Be sure to talk to your doctor to see if you are taking the lowest cost medications available to you.