 |
Medicare began offering Part D prescription drug benefits in 2006. If you are enrolled in Original Medicare and would like prescription drug coverage, you can enroll in a stand-alone Prescription Drug Plan.
There are certain times of year when people can enroll in Part D plans. Upon becoming Medicare eligible, people have seven months to enroll in Part D, beginning three months before the month you become eligible and ending three months after the month you become eligible. Each year, people with Medicare can either enroll in a new Part D plan, switch Part D plans, or disenroll entirely from Part D. This Annual Enrollment Period runs from November 15th through December 31st. Beginning in 2011, the Annual Enrollment Period will run from October 15th through December 7th.
Part D plans will help you pay for some of the cost of your current outpatient prescription medications and for medications your doctor may prescribe in the future.
You will likely pay both a monthly premium and a cost-sharing amount for all of your prescriptions in a Part D plan. The Federal government has created a standard minimum set of benefits that all available Part D plans must meet, but plans can offer alternatives above the standard. There are many Part D plans available around the country, and it is important to understand all of the key differences between Part D plans before you select and enroll in one.
Cost and Coverage
The 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. Each plan’s list of covered drugs is called its formulary.
Some people with limited income and resources may qualify for assistance in paying for the costs of a Part D plan. If you think you might qualify for help, contact 1-800-MEDICARE and ask for information on the Extra Help program. If you also have Medicaid or are enrolled in a Medicare Savings Program, you will automatically be eligible for the Extra Help program.
Each Medicare drug plan can have different coverage and costs, but all plans are required to provide a minimum level of coverage. 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 premium that varies by plan. You pay this premium
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, which is sometimes called a “donut
hole”. This means that after you and your drug plan have spent a certain amount
of money for covered drugs in a given year, 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.
Once you have paid your yearly deductible and before you enter the coverage gap, you will be required to pay approximately 25 percent of your covered drug costs. For 2010, you will enter the coverage gap once you and your drug plan have spent $2,830 for covered drugs. You will exit the coverage gap once you have spent out-of-pocket $4,550 (this number is your plan’s out-of-pocket limit) for covered drugs.
Under the health reform law enacted in early 2010, the Affordable Care Act, beginning in 2011 the coverage gap will start to shrink. In 2011, the cost of single source brand drugs inside the coverage gap will be discounted by 50%. Over the next ten years, the discount inside the gap will grow by a few percentage points each year until it reaches the full 75% in 2020.
Catastrophic coverage
Once you reach your plan’s out-of-pocket limit, your costs are reduced substantially,
because you have reached “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 (no more than five percent
of the drug cost) for any covered drug for the rest of the year.
There are plans that offer some coverage in 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 doses of a prescription a person can have during one month.
Changes from health reform
In 2010, if you reach the Part D coverage gap the Federal government will send you a one-time $250 rebate check.
Beginning in 2011, the Affordable Care Act requires drug makers to provide a discount on brand name drugs while you are in the coverage gap. The discount will be 50% of the cost of your covered brand drugs. You will receive the discount when you go to the pharmacy to fill your prescriptions. In order to determine whether you are in the coverage gap and will receive the discount, you should consult the explanation of benefits (EOB) you receive from your Part D plan.
The diagrams below show the differences in your cost sharing requirements before and after health reform’s coverage gap discount program.
Beneficiary cost sharing in 2010 (without health reform)
Beneficiary cost sharing in 2011 (with health reform)
Also beginning in 2011, the health reform law establishes a process for progressively closing the Part D coverage gap. The gap will be completely closed in 2020. This means that beginning in 2020, after you pay your yearly deductible you will continue to pay approximately 25% of the cost of your covered drugs until you reach catastrophic coverage. Between years 2011 and 2020, you will still pay a higher share for your drugs in the coverage gap, but that portion will decrease a little bit each year until 2020. In the diagram above, the portion of beneficiary cost sharing will shrink to 25%, and plans will contribute the final 25%.
Since 2007, people enrolled in Medicare Part B with certain income levels have had to pay higher premiums. In 2011, similar rules will apply to people enrolled in Medicare Part D. This table illustrates how premiums have increased in 2010 for individuals with higher incomes.
