Medicare Part D–Prescription Drug Coverage
Medicare Part D helps pay for outpatient prescription drugs. You have to choose a prescription drug plan in your area to receive Part D benefits. In most cases, you will be required to use only the plan’s network pharmacies in order to receive full plan benefits and you may be limited to a formulary, which is a list of specific drugs covered by the plan you choose. Not all drugs are covered by all plans.
The pharmacies in the plan’s network and the drugs included in their formulary can change periodically. If the formulary or pharmacy network changes, you will receive a notice from your Part D plan administrator.
Private companies administer Part D. These companies, called Carriers, receive funding from the Federal Government to administer the plans.
Enrollment in Part D is optional and voluntary. No one is required to participate. You can enroll in Part D anytime during your Initial Enrollment Period. Your Part D Initial Enrollment Period coincides with your Part B Initial Enrollment Period. It begins three (3) months before the month you turn age 65 and ends three (3) months after the month you turn age 65.
NOTE: If you miss your Initial Enrollment Period, there are two (2) subsequent Periods:
• Special Election Period – If you wait to enroll in Part D because you already have creditable drug coverage through another source (like an employer or union plan, or COBRA), you can sign up for Part D anytime you choose or if the other coverage is discontinued. The Special Period lasts for three (3) months after the other coverage ends.
• Annual Election Period – If you don’t enroll during your Initial Enrollment Period and you do not have another source of creditable drug coverage, there is an Annual Period that runs from November 15th through December 31st of each year. Your Part D coverage will start on January 1st of the following year. There may be a penalty of 1 % per month on your Part D premium for every month you could have had Part D coverage but didn’t take it.
You may also change your Part D plan each year during the Annual Election Period.
You can enroll in Medicare Part D by going to Medicare’s Web Site (click here). There, you can see a comparison of different plans including formularies, costs, and other important information.
There is a premium for Part D prescription drug coverage, which most beneficiaries must pay. This premium can change annually.
NOTE: Medicare beneficiaries in the greatest need – those who have limited assets and incomes below a certain level – may be eligible for assistance with their Part D premiums, deductibles and co-pays. Requirements for low income assistance vary by state and can change annually. To find out if you are eligible for low income assistance, contact the Social Security Administration at 1-800-772-1213 (TTY 1-800-325-0778).
Depending on the benefit design of the plan you choose, there can be annual deductibles, coverage gaps, co-payments and/or coinsurance amounts. You are NOT allowed to purchase insurance to supplement Part D prescription drug plans – you must pay all deductibles, coverage gaps, co-payments and/or coinsurance amounts out of your own pocket. These expenses can change annually.
Different carriers administer the program in different ways.
Some plans have an initial deductible, while others will not have any deductible. Most will have co-pays until you get to what is known as the “donut hole”.
In 2010 once you reach $2,830 in total drug costs, you will be in the donut hole and you must pay the full cost of prescription drugs until your total out-of-pocket cost reaches $4,550. This annual out-of-pocket spending amount includes your yearly deductible and co-pay amounts. The amount necessary to reach the donut hole changes each year.
When you spend more than $4,550 out-of-pocket, the coverage gap ends and your drug plan pays most of the costs of your covered drugs for the remainder of the year. You will be responsible for a co-pay of $2.40 for each generic drug and $6.00 for other drugs (or 5%, whichever is higher). This is known as catastrophic coverage.
I have now included a video tutorial that will help first time Medicare enrollees choose a Prescription Drug Plan. Click on the following link: Medicare Part D (Open Enrollment) and follow along.
