How It Works
By: Source: AARP Bulletin Date Posted: 2005-11-17 10:22:00-05:00
Before you decide whether to sign up for Medicare drug coverage, you need to understand how the program works.
Who can get Medicare drug coverage?
Anyone on Medicare (with either Part A or Part B) is entitled to drug coverage (known as Part D) regardless of income. No physical exams are required. Nobody can be denied for health reasons.
Do I have to sign up?
No, it's voluntary. But if you sign up later than when you were first eligible, you will pay a penalty except in certain circumstances.
Related Questions:
- Can I wait and sign up later when I need coverage?
- Are there any exceptions regarding late enrollment penalties?
You won't need to sign up if you have other drug coverage that is better than Medicare's—for example, benefits from a current or former employer or union.
Related Questions:
- What if I have drug coverage from my job or retiree benefits?
- How do I tell if my current coverage is better or worse than Medicare's?
- What if I have medigap coverage?
- What if I have veterans or military retiree drug benefits?
- What if I have individual insurance that I buy myself?
How do I get this coverage?
You must enroll in one of the private insurance plans that Medicare has approved to provide it. Some will operate nationwide, others only in certain regions of the country. Wherever you live, you can get drug coverage in one of two ways:
- "Stand-alone" plans that offer only drug coverage. This type would suit people wishing to stay in the traditional Medicare fee-for-service program for their other health care coverage.
- Medicare Advantage plans that cover both medical services and prescription drugs. This type would suit people who prefer managed care.
Will everyone get the same coverage?
No. Each plan must offer coverage that is at least as good as the "standard" Medicare benefit [see chart]. But some offer better benefits or lower costs.
Also, you may get more coverage and pay less out of pocket if your income is limited [see Extra Help Paying for Drugs], or you are in a state pharmacy assistance program, or you have employer or union coverage that supplements Medicare's.
Related Questions:
- What if I'm in a state pharmacy assistance program?
- Will everyone fall into the drug coverage gap?
- What counts toward my $3,600 limit?
- What if I have drug coverage from my job or retiree benefits?
- How do I tell if my current drug coverage is better or worse than Medicare's?
What will I get and what will it cost?
Under the standard benefit (the minimum set by law) for calendar year 2006, you would pay:
- A premium of about $32 a month (in addition to the Part B premium of $88.50 a month in 2006).
- A $250 annual deductible on drug costs before coverage kicks in.
- $500 (or 25 percent) out of the next $2,000 of drug costs. Your plan pays the remaining $1,500 (or 75 percent) in this initial coverage period.
- $2,850 (100 percent) of additional drug costs. Your plan pays nothing in this coverage gap, also known as the " doughnut hole. "
- About 5 percent of all remaining drug costs in the year once you have spent $3,600. Your plan pays 95 percent at this " catastrophic " level of coverage.
Do drug plans vary much?
Yes. There are big differences in premiums and deductibles, the drugs they cover, the copays they charge and the pharmacies they use. Those differences are important to know when choosing a plan [see Choosing a Plan].
In 2006 the costs for many plans vary a great deal from those in the standard benefit above. Many plans offer lower premiums and deductibles—even zero in some cases. Some plans offer additional coverage in the gap, usually for a higher premium. To determine exact costs and benefits, compare plans in your area.
Related Questions:
- How will I know what different drug plans offer?
- How will I know where I am in relation to the coverage gap?
- Will everyone fall into the coverage gap?
- How do I get drugs during the coverage gap?
- What counts toward my $3,600 limit?
- What does not count toward my limit?
- Can I delay reaching the gap?
How many plan choices will I have?
At least 27 different drug plans will be available to you, and perhaps scores more, depending on where you live. Stand-alone drug plans include 10 national plans and many others available locally. Regional and local Medicare Advantage plans include different kinds of managed care (for example, HMOs and PPOs) and private fee-for-service options.
What if I can't afford the costs?
A special part of the Medicare drug program, known simply as Extra Help, provides continuous drug coverage at very low cost for people with limited incomes and savings [see Extra Help Paying for Drugs]. Some state pharmacy assistance programs offer similar or better help.
Related Questions:
- What if I'm in a state pharmacy assistance program?
- What if I don't qualify for drug coverage assistance?
Are there any cost breaks for married couples?
No. Each spouse pays separate premiums, deductibles and copays for prescriptions and will reach each level of coverage according to his or her own drug costs over each calendar year.
How will the premium be paid?
You can choose to have it deducted from your monthly Social Security check or pay it directly to your Medicare drug plan.
What does a "year" of coverage mean?
A calendar year, Jan. 1 through Dec. 31, regardless of when you enroll. The cycle of coverage starts each Jan. 1.
Will I be able to get all the drugs I take now?
Not necessarily. Each plan has a list of preferred drugs it covers, known as a formulary.
A plan must cover at least two drugs in each class of drugs used to treat the same medical condition. It must also cover nearly all drugs used in six classes: antidepressants, antipsychotics, anticonvulsants, antiretrovirals (for HIV/AIDS), immunosuppressants (for transplants) and anticancer drugs.
A few drugs are excluded from Medicare coverage by law. Among them are medications for weight problems, fertility and cosmetic uses, over-the-counter drugs and certain antianxiety treatments (barbiturates and benzodiazepines such as Valium).
Plans are allowed to change some of the drugs they cover during the year. If this affects a drug you are using, your plan must inform you of the change at least 60 days in advance.
You have the right to appeal for an exception at any time if your doctor can show that a nonformulary drug is necessary for your health.
Before granting an exception, a plan may require you to try a drug that is already on its formulary and similar to the nonformulary one you take now, to see if it is equally effective in treating your medical condition.
Related Question: What if I can't find a plan that covers all my drugs?
What about drugs that Medicare already covers?
Medicare Part B will continue to pay for drugs it has covered in the past—usually those that are administered at a hospital or doctor's office.
What will I pay for my drugs?
Your share of each prescription will be either a flat copayment or a percentage of the drug's cost. Most plans will have three or four levels (known as "tiers") of copays, rising from the least expensive generic drugs through "preferred" brand-name drugs to "nonpreferred" brands to rarer high-cost drugs.
Once you have spent $3,600 out of pocket in a year, you will get catastrophic coverage. Your copays will then be 5 percent of each prescription, or $2 for generic drugs and $5 for brand names, whichever is higher.
Related Questions:
Where can I get my prescriptions filled?
You must go to one of the pharmacies within your plan's network, except in unusual circumstances. Going out of network will likely cost more. Your plan must offer pharmacies within a reasonable distance from your home. Many plans will also offer mail order services.
How will the pharmacist know what to charge me?
You will present your plan's prescription drug card at the pharmacy (or send its number if you're using mail order). The card will electronically access your information—whether or not you still have part of your deductible to pay, what coverage you're entitled to, whether you have extra coverage that reduces the cost and what your copay should be.
Will I be able to get a 90-day supply of my drugs?
Yes. Plans are required to make 90-day supplies available through pharmacies in their networks as well as through mail order.
How can I keep track of my drug spending?
Your plan must send you a monthly statement.
Can my plan's charges change after I enroll?
The premium and deductible cannot change between Jan. 1 and Dec. 31. A copay may change if a drug is moved to another tier of charges. Plans can change all charges for 2007 and each future year.
How often can I switch plans?
You will have at least two opportunities to switch plans before May 15, 2006. After that, you can normally change plans only once a year, between Nov. 15 and Dec. 31.
There are exceptions. For example, if you move out of your plan's area or into a nursing home, or your plan ceases services in your area, you can change plans during a special enrollment period at that time.
Related Question: What if I enroll in one plan but then find another I prefer?
What if I live in the U.S. territories?
You will have fewer Medicare drug plans to choose from. Also, the Extra Help program is different in the territories. Contact your local government office for information.
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