Medicare Part D is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries in the United States. It was enacted as part of the Medicare and Prescription Drug, Improvement and Modernization Act of 2003 (MMA) and went into effect on January 1, 2006.
Program specifics
Beneficiaries can obtain the Medicare drug benefit through two types of private plans: beneficiaries can join a Prescription Drug Plan (PDP) for drug coverage only or they can join a Medicare Advantage plan (MA) that covers both medical services and prescription drugs (MA-PD). Most Medicare beneficiaries must affirmatively enroll in a Part D plan to participate. Dual eligibles (those also in Medicaid) are automatically enrolled in one of the less expensive PDPs in their area, chosen at random. If the dual-eligible person is already enrolled in an MA-only plan, then they are automatically removed from the MA plan upon enrollment in a PDP.
The Standard Drug BenefitThe Medicare law establishes a standard Part D drug benefit. Plans must offer a benefit package that is at least as valuable as the standard benefit. The standard benefit is defined in terms of the benefit structure, not the particular drugs that must be covered. In 2009, this standard benefit includes an initial $295 deductible. After meeting the deductible the beneficiaries pay 25% of the cost of covered Part D prescription drugs, up to an initial coverage limit of $2,700. Once the initial coverage limit is reached, beneficiaries are subject to another deductible, known as the "Donut Hole," or "Coverage Gap," in which they must pay the full costs of drugs. When total out-of-pocket expenses on formulary drugs reach $4,350 - including the costs of the deductible and coinsurance - beneficiaries reach the "Catastrophic Coverage " benefit. Beneficiaries entitled to Catastrophic Coverage pay $2.40 for a generic or preferred drug and $6.00 for other drugs, or a flat 5% coinsurance, whichever is greater.[2] Note that this out-of-pocket amount is calculated annually. Beneficiaries who reach the out-of-pocket threshold in one year have to begin to meet it again on January 1st of the next year.
Because the deductible, initial coverage limit, and annual out-of-pocket threshold change each year according to the changes in expenditures for Part D drugs, beneficiary out-of-pocket expenses may increase annually. The Medicare law does not mandate a set premium amount. These costs as well as the list of covered drugs vary from plan to plan and from region to region. Beneficiaries should take time to review the various plans available to them in light of their current and anticipated needs and financial resources. Decisions do not have to be made until December 31st.
[1] Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 108-173 (Dec. 8, 2003), 42 U.S.C.A. § 1395w-101 et seq. (2004 supplement), 42 C.F.R.
[2] 42 U.S.C.A. §1395w-102(b).
Links
- www.kidneydrugcoverage.org
- www.medicare.gov
- 4 Ways to Lower Your Prescription Drug Costs
- 4 Ways to Lower Your Prescription Drug Costs (Spanish)
- Have You Done Your Yearly Medicare Plan Review?
- Your Guide to Medicare Prescription Drug Coverage
- Your Guide to Medicare Prescription Drug Coverage (Spanish)
