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the medicare drug plan
6 Key Facts

1. Anyone on Medicare can get coverage regardless of income or health.

2. You are not obligated to enroll, but there may be consequences if you don't sign up when you are first eligible to do so.

3. To get Medicare drug coverage, you must select one approved private drug plan among many offering different choices. There is no single government plan.

4. Is your income limited? If you qualify for a part of the program known as "Extra Help." you'll pay very little for your medications.

5. Are your drug costs very high? You'll pay no more than 5 percent of the cost of each prescription after you've spent a certain amount of money out-of-pocket in any one year.

6. Do you have better drug coverage already? You probably won't need Medicare's Part D coverage. But it's wise to check.

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Medicare Prescription Drug Coverage Guide

Medicare Part D Glossary

Defining Part D's words, phrases and jargon

Initial enrollment period: The seven-month time frame you get to enroll in Medicare around the time you turn 65 or, if you’re younger with disabilities, around the time you receive your 25th Social Security disability payment. If you have no other creditable drug coverage, you should also use this period to sign up for a Part D plan.

Late enrollment penalty: The extra amount you pay in premiums if you do not sign up for Medicare drug coverage when you first become eligible, unless you already have creditable coverage from elsewhere.

Mail-order service: An option offered by most Part D plans, allowing you to fill your prescriptions in 90-day supplies through the mail.

Medicaid: The state-federal program that provides low-cost health care for people with limited incomes who qualify. (The program has different names in some states — for example, MediCal in California, MassHealth in Massachusetts, TennCare in Tennessee.) Anyone eligible for Medicare as well as Medicaid receives prescription drugs from a Part D drug plan and automatically qualifies for Extra Help.

Medicare Advantage plans: Private health plans that offer an alternative to traditional Medicare. They can be health maintenance organizations (HMOs), preferred provider organizations (PPOs), private fee-for-service (PFFS) plans, special needs plans (SNPs), or Medicare medical savings accounts (MSAs).

Medicare drug plans: Medicare-approved private insurance plans that offer prescription drug coverage in the Part D program. They can be stand-alone plans that provide only drug coverage or Medicare Advantage plans that provide medical care and drug coverage in a single package.

Medicare Part D: The official name of the drug coverage program.

Medicare Prescription Drug Plan Finder: An online tool provided on Medicare’s website that allows you to enter your Zip Code and details of your drugs in order to compare available Part D drug plans head to head to find your best deal.

Medicare Savings Programs: State programs, cofunded by the federal government, that pay some or all of Medicare’s out-of-pocket costs for people with limited incomes who qualify. If your Medicare Part B premiums are paid for under one of these programs, you qualify automatically for Part D’s Extra Help program.

Medigap: Private supplementary insurance that covers many out-of-pocket costs in Parts A and B of Medicare, but not in Part D.

Out-of-pocket limit: A dollar amount, set each year by law, that releases you from the coverage gap and qualifies you for low-cost catastrophic coverage, if your drug costs reach that level in any one year. Any payments you’ve made for your drugs out of pocket since the beginning of the year count toward the limit, and are known as true out-of-pocket costs.

Out-of-pocket spending: How much you pay for drugs from your own money.

Network pharmacies: Pharmacies where you can use your plan membership card to buy your medications. Some of these are preferred pharmacies where your drugs may cost less. Buying your meds from pharmacies outside your plan’s network costs more, maybe even full price, except in special circumstances.

Preferred drugs: The drugs your plan prefers you to use (among several used to treat the same medical condition) because it has negotiated a good discount from the manufacturers. Preferred drugs usually have lower copays in a plan’s tier of charges than non-preferred drugs.

Preferred pharmacies: The retail pharmacies your plan prefers you to use because it has negotiated certain terms, such as lower dispensing fees, with them. Buying your drugs from the preferred pharmacies in your plan’s network costs you somewhat less than the others.

Premium: The amount you pay to a drug plan each month for coverage. (See also: Higher-income Part D premium.)

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