How do I get Medicare prescription drug coverage?
You must enroll in one of the private insurance plans that Medicare has approved to provide it. Wherever you live, you can get drug coverage in one of two ways:
- Through a “stand-alone” plan (PDP) that offers only drug coverage. This type is mainly intended for people who choose to receive their other health benefits from the traditional Medicare fee-for-service program.
- Through a Medicare Advantage plan (MA-PD) that covers both medical services and prescription drugs. This type is for people who choose to receive all their health care services in one package.
What will my premium be?
There is no single monthly premium for Part D prescription drug coverage. Each drug plan sets its own premium for each calendar year. Some Medicare Advantage plans do not charge an extra premium for drug coverage.
Does my income affect how much I pay?
It may. People with incomes over a certain level pay a surcharge for Part D drug coverage on top of their plan premiums. You pay this surcharge if your modified adjusted gross income, as shown on your latest tax returns, is more than $85,000 (for a single person) or $170,000 (for a married couple filing joint tax returns). People with these higher incomes have paid surcharges on their Part B premiums since 2007. If you’re liable for the Part D surcharge, you pay it directly to Medicare while still paying the regular premium to your drug plan.
Be aware that you may need to pay this higher-income surcharge even if your drug coverage comes from your former employer or union as a retiree benefit. If your former employer or union receives a subsidy from the federal government for providing drug coverage, you will not be liable for the surcharge. But if the employer/union has contracted with Medicare to provide Part D coverage — either through a Part D drug plan or through a health care plan that includes Part D coverage — you are liable for the Part D surcharge if you income is above the specified level. Your plan administrators can tell you what kind of coverage you have. (For more details, see “Who Pays the Part D Higher-Income Surcharge.”)
If your income suddenly goes down due to a “life changing” event such as retirement or divorce, you can apply to Social Security (1-800-772-1213) to have both the Part B and Part D surcharges reduced or removed.
What will I get and what will it cost?
Under the standard benefit (the minimum set by law), over the course of a calendar year, you pay:
- A monthly premium (amount varies from plan to plan).
- An annual deductible (no more than $320 in 2015) before coverage kicks in.
- A share of the cost of each prescription (either a flat copay or a percentage of the cost) during the initial coverage period. This continues until your total drug costs — what you and your plan have paid — reach a certain amount ($2,960 in 2015) from the beginning of the year.
- A percentage of costs in the coverage gap (also known as the “doughnut hole”) if you exceed the initial coverage limit. In 2015, you pay 45 percent of your plan’s price for brand-name drugs and 65 percent for generic drugs in the gap unless you have other coverage. The doughnut hole phase ends when certain costs reach a level set by law ($4,700 in 2015). (See “Moving In and Out of the Doughnut Hole.”)
- No more than 5 percent of your drug costs in the “catastrophic period” of coverage. This begins after you’ve reached the out-of-pocket spending limit, which gets you out of the coverage gap, and continues until the end of the calendar year.
It is important to note that your actual costs in Part D — and whether or not you hit the coverage gap — depend on the prescription drugs you take and the drug plan you choose. Also, if you qualify for Extra Help, you will have continuous coverage throughout the year (no coverage gap) and much lower costs.