Medicare Part DMedicare 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 Benefit (Reprinted with permission from the Medicare Rights Center)

The Medicare prescription drug benefit is called Part D. Most Part D plans have a fee that you must pay each month to be in the plan. This is called a premium. If your yearly income is above $85,000 ($170,000 for couples) you’ll pay a higher premium.

There are four coverage periods in most Part D plans. You pay a different amount for your drugs in each coverage period. Which period you’re in depends on how much you and your plan have spent on drugs since the start of the year.

The first coverage period is called the deductible period. During this period, you pay the full cost of your drugs until you meet your deductible. The deductible is the amount you pay out of pocket before the plan covers any of your drugs. It varies by plan, but it can’t be more than $310 in 2011 for a Part D plan.

The second period is the initial coverage period. You reach the initial coverage period once you’ve paid your deductible. In this period, drug costs are shared between you and your plan. Your plan pays part of the cost of your drugs and you pay a copayment or coinsurance. How much you pay depends on your plan. In 2011, this period ends when you and your plan together have spent approximately $2,840 on drugs.

If you and your plan spend $2,840 on drugs, you will reach the third coverage period. This period is called the coverage gap or the doughnut hole. Your plan pays nothing for your drugs during this period. However, the coverage gap is being phased out over the next few years as a part of health reform.

Another change is that you will no longer pay the full cost of your drugs during the coverage gap. Drug manufacturers and the government will pay part of the cost of your drugs during the gap. In 2011, you will only have to pay 50 percent of the cost of brand name drugs and 93 percent of the cost of generic drugs when you are in the gap. The percentage you pay will get smaller each year until the gap is phased out in 2020. At that time you will pay no more than 25 percent of the costs of your drugs. 

The last coverage period is called catastrophic coverage. You reach this period when you and your plan have spent $6,448 on drugs since the start of the year.

In the catastrophic coverage period, your drug costs go down a lot. You pay either 5 percent of the cost of the drug or $6.30 for brand-name drugs and $2.50 for generics, whichever is greater.

People in the Extra Help program have different costs throughout the year. Click here for information.

There are many programs that can help you save money on drugs. Some of these programs include Extra Help, State Pharmaceutical Assistance Programs and charities. Consumer Reports Health Best Buy Drugs is a resource that can help you find safe and effective drugs that are also the best value for your money.

For a free, online resource, Medicare Interactive (MI) Counselor, please visit www.medicareinteractive.org.
 

Links

 

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