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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

Prior authorization: A coverage restriction on a drug, meaning you must receive the plan’s permission before it will cover that drug. You can file an exceptions request together with a statement from your doctor explaining why the prescribed drug is necessary for your medical condition.

Quantity limits: A coverage restriction on a drug, meaning that the plan will not cover a certain drug at the dosage or quantities prescribed unless you receive the plan’s permission. You can file an exceptions request, together with a statement from your doctor explaining why the prescribed dosage or quantity is necessary for your medical condition.

Service area: The geographical region served by your Part D plan. The service area of any stand-alone drug plan is a whole state or, sometimes, a group of states. The service area of a Medicare Advantage plan can be a ZIP code, a county, a group of counties, a state or a group of states. Whichever type you choose, you must live in the service area of the plan you want to join. In many cases the plan’s service area determines your premium, copays, and benefits.

Special enrollment period: A time frame for joining a Part D plan or switching to another outside of your initial enrollment period or the annual open enrollment period — for example, if you move out of your current plan’s service area; move into or out of a nursing home; lose creditable drug coverage from an employer or union plan; return to the United States after living abroad; or are released from prison.

Stand-alone drug plans: Part D plans that provide only drug coverage and are typically used together with medical benefits from traditional Medicare.

Standard Medicare drug coverage: The minimum required by law. Plans can offer better benefits and lower costs.

State pharmacy assistance programs: Programs offered in some states to help people afford prescription drugs. Some “wrap around” Part D coverage provides extra benefits and lower costs for state residents who qualify according to income.

Step therapy: A coverage restriction meaning that the plan requires you to try a less expensive drug before it will cover the one prescribed. You can file an exceptions request together with a statement from your doctor explaining why the prescribed drug is necessary for your medical condition and that you have already tried alternative drugs that have not proven as effective.

Supplementary Security Income (SSI): A federal program that provides an income for people who are 65 and older and blind or disabled. If you receive SSI payments, you automatically qualify for Part D’s Extra Help program.

Tier of charges: Different levels of copays, ranging from least expensive (usually generic drugs), through medium cost (usually “preferred” brand-name drugs) and higher cost (“non-preferred” brand names) to highest cost (rare and very expensive drugs). Charges for each tier vary among plans. Your copay depends on which tier your drug is placed in by your plan.

Total drug costs: What you pay plus what your plan pays for drugs.

Traditional Medicare: The original fee-for-service Medicare program in which you receive your medical benefits directly from Medicare and not through a Medicare Advantage health plan.

True out-of-pocket costs (TrOOP): The payments that count toward the out-of-pocket limit that gets you out of the coverage gap and triggers catastrophic coverage, if your drug costs run that high in a year. These payments include your deductible, copays in the initial coverage period and anything you’ve paid for your drugs in the gap — but not your premiums — since the beginning of the year. It also includes discounts on brand-name drugs that are provided by the manufacturers in the coverage gap.

Patricia Barry writes the AARP Ask Ms. Medicare column and is the author of  Medicare for Dummies (Wiley/AARP, October 2013).

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