What Is Medicare Part D?
Medicare Part D prescription drug coverage, often referred to as Part D, is provided and coordinated by Medicare-approved private insurance companies. Any beneficiary who is eligible for Original Medicare, Part A and/or Part B, and permanently resides in the service area of a Medicare Prescription Drug Plan, can sign-up for Medicare Part D. Medicare Part D coverage is optional, but if you don't enroll in Part D as soon as you're eligible, you might pay a late-enrollment penalty if you enroll later.
You can get Medicare Part D coverage through a stand-alone Medicare Prescription Drug Plan if you're enrolled in Original Medicare. If you're enrolled in a Medicare Advantage plan, you can get this coverage through a plan that includes drug benefits, also known as a Medicare Advantage Prescription Drug Plan. Different insurers offer different types of plans, so your monthly plan premium and out-of-pocket expenses for prescription drugs will vary from plan to plan.
Every Medicare Prescription Drug Plan has a formulary -- that is, a list of covered drugs. The formularies vary among plans. The formulary may change at any time. You will receive notice from your plan when necessary.
It can be a good idea to review your Medicare Prescription Drug Plan coverage every year, to see if your plan covers the medications you need now and may need in the upcoming year.
Finally, be aware that your plan may change its formulary. You may want to review the Annual Notice of Change that the plan sends you every fall to make sure it will still cover your prescription medications in the coming year. Coverage generally follows this pattern:
- If the Prescription Drug Plan has an annual deductible, you pay the full amount of your prescription drug purchases until the deductible is met.
- After you satisfy the annual deductible, you will pay a share of the costs according to the terms and structure of your plan. Your share, which you typically pay to the pharmacy at the time of pickup, could be a flat amount (copayment) or a percentage of the total amount (coinsurance).
- Once you have paid a certain annual maximum amount 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.
Be sure to talk to your doctor to see if you are taking the lowest cost medications available to you. Specific coverage may vary from plan to plan, so read your documentation carefully.
Filling the coverage gap
You may have heard of the Medicare coverage gap (also called the "donut hole") but aren't clear on how it works. After your Medicare 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 temporary limit on what your Medicare Prescription Drug Plan will pay for covered drugs is the coverage gap. The coverage gap applies to both stand-alone Medicare Prescription Drug Plans and Medicare Advantage Prescription Drug Plans.
The recent federal health-care reform legislation will reduce the coverage gap over several years to make prescription drugs more affordable. There will be additional savings in the coverage gap each year through 2020, when the coverage gap is closed completely. For more information, see "Closing the Coverage Gap," or call 1-800-MEDICARE (1-800-633-4227), TTY users 1-877-486-2048, 24 hours a day, seven days a week.
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