All About Medicare Part D

Medicare Part D is the prescription drug coverage for people who are insured under Medicare. It went into effect on January 1, 2006 as Part of the Medicare Modernization act of 2003. This part of your medical coverage is optional. If you opt to participate in the coverage, you will pay a monthly premium.

You have two options to choose from when you are trying to decide on a Medicare Part D plan. You can choose to have a Medicare Part D Prescription Drug Program or a Medicare Advantage Prescription Drug plan. These two options have some very different points that you must consider.

A Medicare Part D Prescription plan is a stand-alone plan that is offered through a private company, but approved by Medicare. You can choose to add this type of plan to a Medicare Supplement plan, an Original Medicare plan, or some Medicare Advantage plans. If you are enrolled in Medicare Part A or Medicare Part B, you are eligible for Medicare Part D.

The Medicare Advantage Prescription Drug plan is a Medicare Advantage plan that offers drug coverage as part of the plan. You must be enrolled in both Medicare Part A and Medicare Part B to be eligible for enrollment in this type of prescription drug coverage.

When you are trying to decide which of these options to pursue, you have to consider the annual cost, as well as the pharmacy availability in your area. The prescription drugs you take on a regular basis can often help you determine which plan is best for your needs because of how much each plan varies from the others. You can go through the plan formulary to determine the coverage amount of each prescription drug you take.

One Medicare requirement is that each Medicare Part D prescription plan cover at least two medications from each therapeutic category, so you have to look for your specific medications to determine the best plan. In some cases, your doctors might be able to change your medication regime to fit in with one specific formulary if you ask. There are some specific categories of medications that don’t have to be covered under any Medicare Part D plan. These include fertility medications, over-the-counter drugs, hair growth medications, and some medications used specifically to treat other conditions.

Do all Medicare Part D drug plans have a coverage gap?

Yes, all Medicare Part D drug plans have a coverage gap if you have substantial prescription drug costs.  The coverage gap varies from one year to the next. When your total drug costs equal a specific amount, you are in the coverage gap. New healthcare laws are slowly closing the coverage gap. In 2012, when your co-pays, deductible amount, and amount the plan paid for prescriptions reached $2,930, you were in the gap until the end of the calendar year or until you paid $4,700 out-of-pocket for deductibles and co-pays. In this case, you had to pay for 50% of brand name prescription drugs and 93% for generic drugs as long as you were in the gap. For 2013, the annual coverage limit was $2,970. Once this was reached for the calendar year, you would have to pay 47.50% of the cost of brand name drugs and 79% of generic drugs until you paid $4,750 out-of-pocket. If you reach the out-of-pocket limit, catastrophic drug coverage begins and your plan pays 95% of prescription costs until the end of the year.  The gap will continue to close through 2020. By 2020, you won’t have to pay more than 25% of the cost of any drug once you reach the gap period.

How much does Medicare Part D cost a year?

The cost of Medicare Part D varies greatly from one consumer to the next. Higher income consumers will pay more for Medicare Part D coverage. One of the variables for your coverage amount is the amount of your income on your IRS tax forms from two years prior to the current year. In 2014, your Medicare Part D coverage cost is based on the information from your income in 2012. An individual who made less than $85,000 in 2012 would only pay for Medicare Part D premiums in 2014, while an individual who made more than $214,000 in 2012 would pay $69.30 plus the plan premium for each 2014 payment. The deductibles also vary from one plan to another.

Is Medicare Part D needed?

Most consumers need Medicare Part D coverage to help them cover the cost of prescription drugs. People who are applying for or receiving certain state assistance programs must be enrolled in Medicare Part D. If you have another prescription drug plan that is considered “credible,” you don’t have to get Medicare Part D unless the benefits under Medicare Part D would outweigh the ones of your current plan.

How do I enroll in Medicare Part D and find help paying for it?

There are many state programs that can help to offset the cost of Medicare Part D coverage. These plans are called state pharmaceutical assistance programs. They coordinate with Medicare to help you pay for your portion of the cost of the plan. Most people with a low income can get help from the government to pay for prescription drug coverage. In 2014, for example, an individual who makes less than $1,436 per month can get government assistance with the cost through the federal Extra Help program.

What if I don’t sign up for Medicare Part D?

If you don’t have credible prescription drug coverage and opt not to sign up for Medicare Part D, you will have to pay the full cost of the prescription drugs your doctor prescribes. If you don’t sign up for Medicare Part D when you are first eligible, you may have to pay a penalty if you decide that you need the coverage later.

What is the best Medicare Part D program?

The best Medicare Part D program is one that you can afford and that covers the prescriptions you use most often. The best program will vary greatly from one person to the next based on these variables. You also have to consider the pharmacy availability in your area for each plan.

What drugs are covered by Medicare Part D?

Each Medicare Part D plan is required to have a formulary. This formulary lists the coverage level of specific medications. Under the current law, every Medicare Part D plan is required to cover at least two drugs from each therapeutic category. Two examples of therapeutic categories that must have at least two medications in the formulary are antibiotics and antidepressants. Medicare Part D isn’t required to pay for any over-the-counter medications. The coverage is strictly for prescription drug coverage. Some prescription drugs aren’t covered under most Part D plans. Fertility medications and hair growth medications are two examples of drug categories that aren’t required under any Medicare Part D plan.

What is the penalty of not taking Medicare Part D?

There is no penalty of not taking Medicare Part D, per se. The penalty comes in when you decide that you need to start using a Medicare Part D plan. If you don’t have credible prescription drug coverage, don’t enroll in Medicare Part D when you first become eligible for it, or go 63 days or more without prescription drug coverage, you will have to pay a penalty if you decide that you want Medicare Part D coverage. The cost of the penalty is dependent upon the amount of time you went without credible prescription drug coverage or coverage under Medicare Part D. The penalty is calculated by multiplying 1% of the national base beneficiary premium times the number of months you were eligible for coverage, but weren’t covered. The amount is rounded up to the nearest $.10 and is then added to your monthly premium amount. The national base beneficiary premium in 2014 is $32.42. This amount changes each year, so your penalty amount may increase annually.

Is there help for people who cannot afford co-pay with Medicare Part D?

There are some instances in which help is available for Medicare Part D co-pays. One option that is available to low-income Medicare beneficiaries is the federal Extra Help program. Under this program, you might be eligible to receive a 90-day supply of your medications at the same price you would pay for a 30-day supply. In addition to the Extra Help program, you might be able to get assistance paying for your prescription drugs under a State Pharmaceutical Assistance Program. Some charities will help you pay for co-pays if you meet charity-specific guidelines for assistance. Patient Assistance Programs might help you to pay for brand name drugs if you meet the criteria set by the program.  If you have already reached the coverage gap maximum out-of-pocket expense amount for the current year, your catastrophic drug coverage will go into effect. This means that you will have to pay only 5% of the total cost of the drug.

Also check out life insurance for seniors to learn how it can give you security.