Medicare drug plans came into existence as part of the federal health reform act of 2010 as Medicare Part D. Part D is administered through private health insurance companies. You can get Part D Medicare as a stand alone prescription drug plan. You can also get Medicare drug coverage as part of a Medicare Advantage plan.
Eligibility
You are eligible for Medicare drug plans if you are eligible for Medicare Part A. You may also get Part D if you have Part B. Participation in part D is voluntary. You do not have to get a Medicare drug plan.
Who Runs Part D Medicare?
Medicare runs the overall program. Private insurance companies send plans for inclusion in part D to Medicare for approval. Once approved by Medicare, it becomes one of the Medicare drug plans available to you.
If you want Medicare Part D coverage, you need to choose a specific plan from a private insurance company. You enroll directly with that insurance company.
Part D Plan Coverage
Part D covers prescription drugs. But, it does not cover all prescription drugs. Each plan has a list of drugs they cover. This list is known as a formulary.
If a drug is in the formulary, a plan will then pay its share of a prescription. If the drug is not in the formulary, the plan will not pay. Also, you must buy the drug through a pharmacy or distributor that participates in the plan.
Medicare Part D Costs
Premiums
The cost of Medicare drug plans vary. You will most likely pay a premium. Premiums range from no premiums to $50 a month. The price of premiums varies. It depends on the plans available in your area. It also depends on the plan itself.
Deductible
There is an annual deductible of $310. That is, you pay for this much every year before the plan pays for anything. Some high premium plans include this deductible in the premium.
Actual Coverage
After you have paid the first $310, the plan pays about three-fourths of the cost of the drug. You pay the other fourth of the cost as a co-pay. It is possible that your co-pay is higher for brand name drugs and less for generic drugs. This depends on the plan.
Part D Doughnut Hole
All drug plans for Medicare continue to pay their share of the drugs up to a certain amount. Once your yearly drug total reaches $2839 dollars, the plan stops paying. You must pay the entire amount of the drug cost until you reach a certain out-of-pocket cost.
There is some help when you are in the doughnut hole. Some high premium plans continue to pay some of the costs. Albeit, it is less. Also, brand name drugs are now sold at 50% to people who are in this coverage gap.
Catastrophic Coverage
Once your out-of-pocket cost exceeds $4550 in one year, the plan begins to pay again. The part D plan will cover 95% if the cost. You must pay the remaining 5%.
Selecting Medicare Drug Plans
When you compare Medicare drug plans, use the following criteria to help you decide:
- Widest choice of drugs available
- Fewest restrictions on drug availability
- Lowest overall cost
The goal is to have the lowest overall cost to you. This means not just looking at the premiums. You need to look at the deductible, co-payments, coverage in the doughnut hole and the number of generics available.
Switching Plans
You can switch plans anytime if:
- You live in a long-term care facility, or
- Receive Medicaid and Medicare.
Everyone else can switch plans only during the open enrollment period. The open enrollment period is from November 15 to December 31 of each year.
