Medicare Part D: The Prescription Drug Benefit
The Medicare Prescription Drug Benefit (Part D) is unlike many employer
sponsored drug plans that provide first dollar coverage and a uniform
co-payment for every drug purchase, the Medicare plan is more of a
catastrophic insurance plan which includes the following features for
Participation in this plan is voluntary.
Medicare beneficiaries have the option to sign up for a stand-alone
drug plan or join a private health plan that offers drug coverage.
Although the monthly premiums can vary depending of the plans and
coverage, the basic monthly premium is about $39 for a stand alone plan.
The basic annual deductible is $310 for a stand alone plan.
Medicare would then cover 75 percent of drug costs from $310 to $2,830
for a basic stand alone plan. There is no additional Medicare coverage
for drug costs until a beneficiary spends $4,550 out of their own
pocket. This gap has been referred to as the "donut hole".
Once a beneficiary spends $4,550 out of their own pocket on
prescription drug costs, Medicare covers 95% of the rest of their
prescription drug costs for that year.
Keep in mind that extra help to pay for Medicare Part D is available
for beneficiaries with low incomes and limited assets.
Benefit Plans Negotiate Discounts
Keep in mind that many large benefit plans negotiate significant volume
discounts. Through the new Medicare prescription drug benefit they will
pay the lower prices negotiated by plans. However, Medicare
beneficiaries who fail to sign up during their initial enrollment
period will be subject to a late enrollment penalty if they choose to
sign up later, unless they can show that they had other creditable
prescription drug coverage through a retiree plan, veterans' benefits,
etc. The idea is to discourage healthy people who currently have no
other drug coverage from waiting "until they need it" to enroll.
Conduct Careful Research
It is important for Medicare beneficiaries to conduct careful research
before they decide whether or not to enroll in Medicare Part D (the
Prescription Drug Benefit), because unfortunately, if a mistake is made
during the open enrollment period, it could prove very costly at a
later date. To learn more contact Medicare at 1-800-MEDICARE (1-800-633-4227)