Prescription drug coverage

Medicare Part D prescription drug benefits started being offered in 2006. You can sign up during an open enrollment season for a Part D plan offered by a private insurance company that has a contract with the Federal government. Your Part D plan will help you pay for your current outpatient prescription medications and for medications your doctor may prescribe in the future.

You may pay both a monthly premium and a share of the cost of your prescriptions in a Part D plan. The Federal government has created a standard set of benefits that all available Part D plans must offer, but plans can offer alternatives above the standard. It is important to understand all of the key differences between Part D plans before you select and enroll in one.

Cost

The new Medicare Part D program helps cover the cost of your outpatient prescription drugs. Each Part D plan has a premium, a different cost-sharing structure, and each one offers a different set of drugs — though most plans cover the vast majority of drugs most commonly used by Medicare beneficiaries.

Covered

Each Medicare drug plan can have different coverage and costs, but all plans are required to provide a minimum level of coverage by Medicare. Your actual costs may vary depending on the prescriptions you use, the plan you choose, whether you choose a pharmacy within your plans network, and whether your prescriptions are on your plan’s formulary. Extend Health’s Prescription Profiler tool can help you to determine the cost and coverage of plans and help you find the plan that is best for you.

Monthly premium
Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B premium. If you belong to a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium may include an amount for prescription drug coverage.

Yearly deductible
Amount you pay for your prescriptions before your plan begins to pay. Some drug plans don’t have a deductible.

Copayments or coinsurance
Amounts you pay at the pharmacy for your covered prescriptions after the deductible. You pay your share, and your drug plan pays its share for covered drugs.

Coverage in the gap
Most Medicare drug plans have a coverage gap. This means that after you and your drug plan have spent a certain amount of money for covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit. Your yearly deductible, your coinsurance or copayments, and what you pay in the coverage gap all count toward this out-of-pocket limit. The limit doesn’t include the drug plan’s premium or what you pay for drugs that aren’t on your plan’s formulary. For 2010, gap coverage is when you have between $2,830 and $4,550 in total drug costs in a year.

Catastrophic coverage
Once you reach your plan’s out-of-pocket limit during the coverage gap, you automatically get “catastrophic coverage.” Catastrophic coverage assures that once you have spent up to your plan’s out-of-pocket limit for covered drugs, you only pay a small coinsurance amount or copayment for the drug for the rest of the year. For 2010, this after your yearly out-of-pocket prescription drug costs (including copays, coinsurance and 100% drug payments) reach $4,550.

There are plans that offer some coverage during the gap, like for generic drugs. However, plans with gap coverage may charge a higher monthly premium. Check with the drug plan first to see if your drugs would be covered during the gap.

If your doctor thinks you need a drug that isn’t on the list, or if one of your drugs is being removed from the list, you or your doctor can apply for an exception or appeal the decision to the health plan. Your plan must let you know at least 60 days before removing a drug from its formulary, and it can choose to add new drugs as they become available.

Plans can also place restrictions on how you get your drugs. Here’s how:

• Some plans may require prior authorization. A plan may require the physician to demonstrate medical necessity before the pharmacist is allowed to dispense the drug. Often the plan will want the doctor to try a different drug first.
• Some plans may use quantity limits. This places an upper limit on how many refills of a prescription a person can have.