Medicare Prescription Drug Coverage (Part D)
Medicare Part D prescription drug coverage, often referred to as Part D, is available to anyone who is also eligible for Original Medicare. You have to get Medicare Part D through a private insurance company that is contracted with Medicare to offer these plans. Different insurers offer different types of plans, so your cost for the plan (premium) and your out-of-pocket expenses for prescription drugs (copayments, coinsurance and deductible) will vary. You must live in the service area for the particular plan that you are considering and continue to pay your Part B premium, if applicable. You’ll have to shop around to decide which plan is best for you.
There are two ways to get Medicare prescription drug coverage:
- Medicare Prescription Drug Plans – These plans (sometimes called “PDPs”) add stand-alone drug coverage to your existing Medicare health coverage such as Original Medicare, Medicare Supplement, or certain types of Medicare Advantage plans.
- Medicare Advantage Plans that include Medicare Prescription Drug coverage – These plans provide you with hospital, medical, and prescription drug coverage (Part D) under one plan. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.”
Part D coverage typically works like this:
1. You pay a monthly premium to be covered under the plan.
2. If the plan has a deductible, you pay the full amount of your prescription drug purchases until the deductible is met.
3. After you satisfy the deductible, you will pay a share of the costs according to your specific plan. That could include a flat amount (copayment) or a percentage of the total amount (coinsurance). You typically pay this amount directly to the pharmacist at the time of purchase.
4. After your Part D coverage has paid a certain amount for prescription drugs, you may have to pay all costs yourself up to a yearly limit. This is sometimes called a “coverage gap” or “donut hole.” Read your Medicare prescription drug plan documents carefully to see if this applies to your plan. Not all plans have a coverage gap, and there are ways to help you fill this hole. See “Filling the donut hole” below for more about that.
5. Once you have paid $4,700 (in 2012) out of your own pocket for prescription drugs, you automatically get “catastrophic coverage.” This means for the rest of that particular year, you would only pay a small copayment or coinsurance amount for prescription drugs.
Note that Medicare Part D coverage may differ from plan to plan. Some drugs (for example brand-name drugs vs. generic drugs) are covered at different levels. Each insurance company determines what drug is covered at which levels. The insurer will publish a prescription drug “formulary” that lists this information. Make sure your prescriptions drugs are covered under the plan before you sign up.
When to enroll in a Medicare Part D plan
Your initial enrollment is a seven-month period that starts three months before your 65th birthday through four months after your birthday.
After your initial enrollment, general enrollment occurs during the Annual Enrollment Period (AEP). In 2011 (for 2012 plans), this period will begin October 15 and last through Dec 7.
You must enroll in a Medicare prescription drug plan as soon as you are eligible. Be sure to enroll early so you have your ID card as soon as your coverage begins. If you don’t join a Medicare Part D plan when you are first eligible, you may have to pay a late enrollment penalty when you do join. The penalty is waived if you qualify for and get “Extra Help” for low income individuals.
Do not let your prescription drug coverage lapse for 63 days or more. If you do, you may have to pay the penalty. You don’t need prior prescription drug coverage to get Medicare Part D if you enroll when first eligible. But once you enroll in Medicare Part D, you must continue to have some form of “creditable” prescription drug coverage without a lapse.
Creditable coverage means you could have a prescription drug plan through any of the following:
- An employer or union group
- Indian Health Services
- Department of Veterans Affairs
- A private health insurer
When you leave a creditable prescription drug plan, you should receive a letter or certificate showing the dates of your coverage. Keep this letter somewhere safe because you may need to prove that you did not have a lapse in coverage later.