Medicare Part D Prescription Drug Coverage

Medicare has contracted with numerous insurance companies, to offer prescription drug plans also known as PDP’s. If you’re considering a PDP, please keep in mind the following: Part D is an option - not a requirement.  However, if you don’t join a PDP when you become eligible, you’ll have to pay a higher premium if you join later.

PDPs have a monthly premium in addition to the Medicare premium you already pay. However, some Medicare Advantage plans have a PDP included as a benefit without an additional monthly premium.

If you’re enrolled in a Medicare Advantage plan, such as an HMO through a private insurance company, you may already have prescription drug coverage. If that’s the case, choosing the PDP isn’t necessary – in fact, getting the PDP would require you to drop your Medicare Advantage coverage!

The Medicare Part D program is constantly changing. The “best” plan this year may not be the best plan next year.  If you do not review your plan each year in November, you may be losing money.  After deciding on your Medicare Plan then we can help you with your PDP.  We typically run your formulary or list of prescriptions through the system to determine which of say 2 or 3 programs would be best. 

Each company has their own formulary or list of drugs that they offer discounts on. Each company can add or delete drugs from their formulary without having to give any advance notice.  In other words, your drugs may be covered today but may not be in the future.

Once you sign up with a Medicare Part D Prescription Drug Program (PDP) you will only be able to switch to another plan between November 15 and December 31. The new plan you select will go into effect on January first of the following year.

The Medicare Part D 2011 plan has a deductible of $310 of your initial drug costs.  There are plans that cover the deductible but them may be offered at a higher cost.  Your initial coverage, you generally pay a copayment or coinsurance, and your Part D plan pays its share for each covered drug until your total amount reaches $2,840.

The Medicare Part D Donut Hole begins here but now in 2011 you will receive a 50% discount on covered brand-name prescription medications. This donut hole continues until your total out-of-pocket cost reaches $4,550.

Catastrophic coverage begins when you spend more than $4,550 out-of-pocket.  The drug plan pays most of the costs less a small copayment.

The good news is that the Affordable Care Act signed into law on March 23, 2010 makes several changes to Medicare Part D to reduce your out-of-pocket costs when you reach the donut hole.

In 2010, you will receive $250 if you had expenses in the coverage gap.  Starting 2011, you will receive a 50% discount on the total cost of brand name drugs while in the gap.
And by 2020, the government will close the gap to paying only 25% of the drug costs.  While not all seniors will reach the gap, this is a good step forward to reducing drug costs for those that need it the most.