Understanding Medicare Drug Coverage: Part D Basics
Introduction
Medicare, the federal health insurance program for people 65 and older and for younger people with disabilities, offers insurance coverage to help pay for prescription drugs. This insurance coverage is known as Medicare Part D.
The two kinds of Medicare plans that provide prescription drug coverage are:
“Stand alone” prescription drug plans that offer only prescription drug coverage. You can add this type of plan to original Medicare and some types of Medicare Advantage plans that do not cover prescription drugs; or
Medicare Advantage (MA) Plans, which are health maintenance organizations (HMOs), preferred provider organizations (PPOs), or private fee for service plans (PFFS). You generally can get all of your Medicare health care and prescription drugs through one plan. You may also see them referred to as Medicare Health Plans or Medicare Part C.
If you are have not yet enrolled in a plan, you can sign up from November 15 through December 31 each year. If you are enrolled in a “stand alone” Medicare drug plan, you may switch plans at this time. You can join or switch Medicare Advantage Plans from November 15 to March 31, but cannot use this extra time to add or drop drug coverage—you must do that before December 31.
Drug plan sponsors will start promoting their drug plans for the coming year in October.
If you have Medicare drug coverage, watch your mail for your plan’s “Annual Notice of Change.” You will need to read this carefully to see what changes will be made to your plan for the coming year and compare this coverage with other plans available in your area. The information in this booklet will give you some tools to help you make this comparison and find the plan that meets your needs. If you decide to keep the same drug plan, you can continue your coverage without doing anything.
If you are new to Medicare, you’ll find this same information useful in helping you decide whether or not Medicare drug coverage is right for you and, if so, how to enroll.
What is Medicare Drug Coverage?
How does the coverage work?
Medicare Part D is insurance that you purchase to cover a portion of your drug costs. You pay any premiums, deductibles, copays or coinsurance, unless you qualify for assistance paying these costs.
Everyone on Medicare can get drug coverage, regardless of income. You choose and enroll in a private plan approved by Medicare. The insurance coverage is voluntary; you don’t have to sign up. You cannot be denied coverage for health reasons. Medicare drug plans vary greatly. Wherever you live, you will have many plans to choose among. Also:If you cannot afford to pay the insurance premiums, copays and the deductible for Medicare Part D, there is a program known as Extra Help offered through the Social Security Administration, which pays for or lowers these costs for people who qualify. Many states also have programs that may help pay the cost of prescription drugs.
What do the plans cover?
All drug plans approved by Medicare must offer the standard level of coverage set by Congress. Some plans provide additional savings and more coverage.
The standard drug benefit provides:
An initial level of prescription drug coverage, and
Added protection for those with very high drug costs (known as catastrophic coverage)
| Standard Coverage | 2007 | 2008 |
| Deductible (if you have one) |
Up to $265 | Up to $275 |
| Initial Coverage Limit (Total of what you and your plan pay) |
$2,400 | $2,510 |
| Coverage Gap |
Unless you have extra coverage, you are responsible for 100% of drug costs plus your premium | Unless you have extra gap coverage, you are responsible for 100% of drug costs plus your premium |
| Catastrophic Coverage |
Once your True Out-Of Pocket (TrOOP) costs reach $3,850 Medicare is responsible for 95% of your drug costs for the remainder of the year | Once your True Out-Of Pocket (TrOOP) costs reach $4,050 Medicare is responsible for 95% of your drug costs for the remainder of the year |
Note: Deductibles, copays, coinsurance and payments made for drugs in the coverage gap are included in your True Out-of-Pocket costs (TrOOP.)
Premiums do not count as True Out-of-Pocket (TrOOP) Drug costs.
Some plans, employer/union benefits and state pharmacy assistance programs may cover costs in the coverage gap.
If you are in a Part D plan that covers drugs in addition to those covered by Medicare, the costs you pay are not counted toward your True-Out-of-Pocket (TrOOP) costs.
