What is Medicare Drug Coverage?
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.
There are two kinds of Medicare plans that provide insurance coverage for prescription drugs:
1. “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.
2. Medicare Advantage Plans (also called Medicare Health Plans or Medicare Part C) such as health maintenance organizations (HMOs) or preferred provider organizations (PPOs). You get all of your Medicare health care and prescription drugs through one plan.
How Does the Drug Coverage Work?
- Everyone on Medicare can get drug coverage, regardless of income.
- You choose and enroll in a private drug plan that Medicare has approved.
- You can switch plans or enroll for the first time during the annual open enrollment period, which runs November 15 to December 31 each year. Or, if you're new to Medicare, you'll have a special enrollment period, which runs three months before to three months after the month you turn 65.
- The coverage is voluntary; you don’t have to buy a Medicare plan if you don’t want one.
- You cannot be denied coverage for health reasons.
- There is no single Medicare drug plan. Wherever you live, you will have several private plans from which to choose.
Open Enrollment Period
Every year between November 15 and December 31, you can switch Medicare drug plans or sign up for the first time. However, it’s generally recommended that you enroll in a plan in early December to ensure that your drug plan will have a record of your enrollment by January 1.
If you are now in a Medicare drug plan, you will hear from your drug plan company in October if they have made changes in their plan. It’s always best to compare plans each year to be certain you buy the plan best for you.
What Do the Medicare Drug Plans Cover?
All drug plans approved by Medicare must offer a standard level of coverage set by Congress.
This 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).
However, Medicare drug plans may look very different from the standard benefit. Many plans provide greater savings and give more coverage.
Here is the standard level of Medicare drug coverage for 2007:
Deductible Initial Coverage |
You may need to first pay a deductible (up to a maximum of $265 per year) before your plan starts to help pay for your drugs. Your drug plan will then pay about 75% of your drug costs and you will pay roughly 25% of your drug costs, up to a combined total of $2,400. |
Coverage Gap |
If your total drug costs, that is, the amount paid by both you and your drug plan are higher than $2,400 a year, you will pay 100 percent of the cost of your drugs up to $3,850 (total) out-of-pocket before your coverage starts again. Note: Premiums don’t count as out-of-pocket drug costs. |
Catastrophic Coverage |
Once your total drug costs reach $5,451.25, your plan will cover up to 95% of the rest of your prescription drug costs for the calendar year. |
Medicare is required, by law, to update the dollar amounts every year.
Extra Help
If your income is less than $15,315* a year for a single person or $20,535* for a married couple living together in 2007, see Extra Help for People with Limited Incomes. This describes Medicare’s special program that can greatly cut your out-of-pocket drug costs. It can reduce or eliminate Medicare Part D premiums, deductibles, and co-payments, and provide drug coverage all year long (no donut hole). You can apply at any time; if you are found eligible, you you can enroll in a plan right away. You won't have to wait until the next open enrollment period to get drug coverage or pay a late enrollment penalty.
Don't wait to apply! If you do qualify, you'll save $100s – maybe even $1,000s – on your prescription drugs.
Additional Resources
The Social Security Administration
The Social Security Administration or your state and local Medicaid office can determine whether you are eligible for help with paying for Medicare Part D deductibles, premiums, and copays. Applying online is the fastest way to find out if you’re eligible or you can call Social Security at 1-800-772-1213 (TTY 1-877-486-2048).
Medicare
Medicare has created a plan finder tool to help you find a drug plan that meets your personal needs. Medicare representatives are also available to help on the telephone. Call Medicare at 1-800-633-4227 (TTY 1-877-486-2048)
MyMedicare.gov
MyMedicare.gov allows you to access your personal information on Medicare benefits and services, including claim status and eligibility for preventive services.
State Health Insurance Assistance Programs
State Health Insurance Assistance Programs (SHIPs) have counselors that help you if you need individual assistance with Medicare issues. You can also call Medicare at 1-800-633-4227 to find a SHIP counselor in your state.
