Medicare Part D (Medicare Prescription Drug Plan)
There are two types of Medicare Part D. If you are using Original Medicare, you’ll use a stand-alone Medicare Prescription Drug Plan (PDP). This presrition plan, Part D, is optional. It is run by private companies approved by Medicare. Alternatively, if you are enrolled into a Medicare Advantage Plan, you may use Medicare Advantage Prescription Drug Plan (MA-PD) with Prescription Drug Plan as a part of Medicare Advantage.
- You are eligible for Medicare Prescription Drug Plan if you are enrolled in Medicare Part A and/or Part B.
- Covers most types of prescription drugs (both generic and brand-names) with few exceptions.
- Part D adds drug coverage to Original Medicare, HMO and PPO Plans, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
- Unlike the Original Medicare, the Part D coverage is not standardized. All plans must provide at least a standard level of coverage set by Medicare, but each plan can vary in cost and drugs covered. Plans decide which drugs they cover, at what level (tier), and whether not to cover some of them at all.
PREMIUM / DEDUCTIBLE / CO-PAYMENT/ COINSURANCE
- Each plan can vary in cost and drugs covered. The cost include: monthly premium, yearly deductible and copayment / coinsurance.
- Most Medicare Drug plans have a coverage gap (sometimes called a ‘donut hole’). It means that after you and your plan spent a certain amount of money, you need to pay out-of-pocket for all drug costs up to the specified limit. Above this limit there is a catastrophic coverage when you need to pay only a small coinsurance/copayment for the rest of the calendar year.
You can join, switch, or drop Medicare Prescription Drug Plan (PDP):
- At Initial Enrollment Period – a 7-month period that begins 3 months before you turn 65, or 3 months before your 25th month of disability. The period includes the 3 months before, the month of, and the 3 months after the triggering event, such as ‘turning 65′.
- At Annual Enrollment Period - between October 15 and December 7. Your coverage will begin on January 1 of the following year.
- In certain situations you may be eligible for a Special Election Period (SEP) that allows you to make changes in your coverage outside of enrollment periods described above. Examples of SEP are: you’ve moved out of service area, you are enrolled into PACE plan, you’ve lost creditable prescription coverage, you have both Medicare and Medicaid, etc. SEP length is dependent on event that triggered it. For example, people who qualify for Extra Help have continuous SEP – they can change plans once a month.
- On switching PDP, you don’t need to cancel the old plan. It will end automatically when the new plan begins.
- Normally enrollment is on calendar year basis, starting the date your coverage begins.
- If you didn’t enroll in Prescription Drug Plan when you were first eligible and you go without Creditable Prescription Drug Coverage for 63 continuous days or more, you may have to pay a penalty if you’ll decide to join later. (Creditable Prescription Drug Coverage is prescription drug coverage that is at least ‘as good’ as standard Medicare Prescription Drug Coverage). The penalty is 1% for each month you could have been enrolled but were not (assuming you didn’t have the creditable coverage).
- Each PDP is required to provide to its members the Annual Notice of Change by October 31 of each year. Changes may include changes in drug tier structure as well as cost sharing.
There are four stages in PDP. Coverage vary significantly from various carriers For example, there are several plans that do not have an up-front deductible. For an in-depth analysis from plan to plan, call (215) 658-1555.
1. Yearly Deductable
You pay the first $310 of drug costs before plan starts to pay.
2. Initial Coverage (ICL)
For each covered drug you pay a copayment/coinsurance (defined by the plan), and the plan pays its share. The typical coinsurance is 25%, i.e. you are paying 25% of the drug costs, the insurance company pays the rest. The initial coverage continues until the total drug costs (total of what you’ve paid and what insurance company paid) reaches $2,930.
3. Coverage Gap (donut hole)
Once the total costs of prescriptions (paid by you and your plan) has reached $2,930, you are paying ALL drug costs until you’ve spent $4,550 out-of-pocket. This does not include monthly premiums (you must continue to pay them), but include yearly deductable, coinsurance/copayments, and $3,610 while in the coverage gap. Despite you are paying 100% of the drug cost, the drug cost is reduced to the plan’s negotiated price (by the fact of you belonging to the Medicare PDP). Notice, there are some ‘enhanced plans’ providing some coverage during the gap (such as generic drugs), usually for an extra premium. These plans may have different copayment/coinsurance during the Coverage Gap than during the Initial Coverage.
4. Catastrophic Coverage
Once you’ve spent $4,550 out-of-pocket during the year for PDP, the coverage gap ends and catastrophic coverage begins. You are only paying a small coinsurance (like 5%) or a small copayment (like $2.50 for generic drugs or $6.30 for brand name drugs) for each drug until the end of the calendar year.
The above-mentioned dollar amounts represent the MAXIMUM of allowed. Some plans may have numbers below the maximum.