Medicare Part D – Understanding the Program
Medicare is a nationally funded government service that helps pay for medical services for seniors 65 years of age or older, or those who are younger as long as they meet various requirements.
Medicare D is the section of Medicare services that covers prescription drugs, offering a variety of options, depending on geographic location and the type of current medical or drug coverage a senior has through employee-based or self- employed insurance plans.
Medicare Part D was developed as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, going into effect in January of 2006.
According to Medicare's website, individuals who have average costs for prescription drugs can receive reimbursement or coverage of nearly half those drug costs. For individuals with high and unexpected prescription drug costs, it can pay up to 95% of these costs, following approximately $4,500 in out of pocket expenses each year.
Therefore, an individual who must pay $600 a month for a specific drug may have to pay full price for the drug for approximately seven months, while the following five months of the year, they may pay approximately $30.00 for the same drug. Individuals may choose between two types of private plans for prescription drug coverage under Medicare D; by choosing only drug coverage or a coverage plan that offers medical services combined with prescription drug services. The first type of plan is called a PDP (Prescription Drug Plan) while the latter is called Medicare Advantage.
Various options are available, again depending on geographic location and service providers. Part D doesn't cover all drugs, which often requires individuals and their doctors to select drugs covered under this Medicare plan.
The doughnut hole is a popular nickname given to the period of time when beneficiaries are required to pay full cost of medicines after coverage limits for the year are reached.
(These costs may range anywhere from $750 to $4,500 in common scenarios).
The limit of $2,830 for 2010 includes what individuals have to pay for out-of-pocket expenses, including the total cost of drugs, plus what the drug plan pays. As in the scenario listed above, after an individual has paid the maximum in out-of-pocket expenses, which also includes deductibles and initial coinsurance, they may receive their drugs at lower costs. For example:
$0-$310 - no Medicare coverage of costs (deductible is out of pocket)
$295-$2,700 - 75% covered by Medicare (deductible is 25% out of pocket)
$2830 - $4550 - no Medicare coverage of costs - Doughnut Hole (all costs are out of pocket)
Over $4,550 - 95% covered by Medicare (5% is out of pocket) The deductible, or out-of-pocket amounts listed above don't include prescription drug plan monthly premiums.
The enrollment period for Medicare part D starts on November 15 of each year. However, seniors should be aware that they are able to choose different drug prescription plans based on their specific medical needs. Some plans offer co-pays, while some don't cover specific drugs at all.
Seniors concerned about their medications and possible coverage should access Medicare's Prescription Drug Plan Finder to determine which plan may best suit their needs. The Finder provides a list of covered medications for consumer access.
The plan also determines total costs for each plan, premiums, deductibles, and drug prices during initial coverage periods, gaps, or for catastrophic-coverage periods.
Seniors may be required to pay certain deductibles for Medicare D prescription drug coverage, which is often determined by geographic location and available services provided in specific localities. Following the deductible, seniors were required to pay roughly 25% of covered prescription drugs. However, other Part D plans have a limit on deductibles and utilize a tiered payment system rather than coinsurance at that point.
For additional information regarding Medicare Part D and information regarding coverage and premiums for a specific area, visit the Medicare Web Site