Medicare Part D is a prescription drug benefit that is available to anyone who is eligible for Medicare Part A and/or Part B (hospital and/or medical coverage). It is an optional benefit that is offered through Medicare-approved private plans. These plans must provide coverage that meets certain minimum standards set by Medicare, although some plans choose to offer more coverage than that. For example, a plan may cover additional drugs or not require a deductible.
Plan Costs
Members of Medicare Part D plans pay a monthly premium in addition to any premiums they may already pay for Medicare hospital or medical coverage. Most members are also responsible for paying part of their prescription costs. Below is a description of the various plan costs.
Monthly Premium: A monthly fee that varies depending on the plan. It's important to remember that the lowest premium doesn't guarantee the best value. Oftentimes, plans with low premiums require more out-of-pocket payments for medications.
Yearly Deductible: This is the member's share of prescription costs before the plan begins to pay. In some cases, a plan may not require a deductible or only require a deductible for certain drugs, such as brand-name drugs.
Copayment/Coinsurance: The share of the drug cost that the member is responsible for paying. A copayment is a flat amount; a coinsurance is a percentage of the drug cost.
Note: Costs may differ for people who qualify for extra help paying for prescription drug coverage.
Getting Extra Help with Medicare Part D Costs
People who have limited income and resources may qualify for extra help from Medicare to cover some or all of their costs:
- Individuals: Their 2007 annual income is less than $15,315 and their assets do not exceed $11,710.
- Couples: Their 2007 annual income is less than $20,535 and their assets do not exceed $23,410.
For additional information, contact the Centers for Medicare & Medicaid Services at 1-800-MEDICARE (1-800-633-4227), 24 hours a day, 7 days a week. TTY/TDD users should call 1-877-486-2048.
Covered Drugs
Every Part D plan must cover at least one drug in each drug category designated by Medicare. Certain categories of drugs (such as barbiturates) are excluded from Medicare Part D coverage. Plans can differ based on the specific drugs they choose to cover within these categories and what type of coverage rules apply. Always check a plan's formulary (list of covered drugs) to see if specific medications are covered by the plan.
Pharmacies
In general, members must use pharmacies that participate in a plan's network of pharmacies in order to have their drugs covered by the plan, although there are exceptions (such as in an emergency). In most cases, members who use a network pharmacy will not need to submit a claim form. Network pharmacies include retail pharmacies and, in some cases, a mail-order pharmacy.
Mail-order pharmacies provide extra safety and the convenience of having medications shipped right to the member, often at no additional charge. Members may also be able to get a larger quantity of medication for one low copayment.
Stages of Coverage
Medication costs vary throughout a plan year based on the stage of coverage an individual is in. The coverage stage is determined by the amounts that both the member and the plan have paid.
- Stage 1: Deductible
This is the amount that members pay out of pocket before the plan begins covering their drugs. Depending on the plan, a member may have to pay a yearly deductible on some or all of their drugs. For example, the plan may require a deductible for brand-name drugs but not for generic drugs. - Stage 2: Initial Coverage Period
This is the period that begins after members meet their annual deductible (if the plan has one) and that ends when their total drug expenses reach the initial coverage limit ($2,510 in 2008). This amount includes what the member has paid and what the plan has paid. During this period, the member will generally pay a portion of the cost of covered drugs (a flat copayment or a percentage coinsurance) and the plan will pay the rest. Actual amounts vary by plan. - Stage 3: Coverage Gap
This is the stage when members are responsible for 100 percent of their prescription drug costs. In 2008, the Coverage Gap (also called the ":Donut Hole":) begins after a member's total yearly drug costs (paid by both the member and the plan) reach $2,510 and continues until the member's yearly out-of-pocket drug costs reach $4,050. Certain plans provide partial coverage during the Coverage Gap (for example, coverage for generic drugs). - Stage 4: Catastrophic Coverage
In 2008, catastrophic coverage begins after the member's yearly out-of-pocket drug costs reach $4,050. During this stage, the member pays:
| For Generics: (including brand-name drugs treated as generics) |
The greater of $2.25 or 5% coinsurance |
| For all other drugs: | The greater or $5.60 or 5% coinsurance |
(The above is for up to a 90-day supply at a retail or mail-order pharmacy.)
Note: Costs indicated may not apply to people who receive extra help paying for prescription drug coverage.
Your Guide to Part D:
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General Part D Information
Learn about the Medicare Part D benefit:
- What is Medicare Part D?
- Who is eligible for Medicare Part D?
- What are the different Medicare Part D plan options?
- How can I save more and delay the Coverage Gap longer?
- What do I need to know about prescription safety?
- Where can I find other useful resources?
My Current Situation
Get information for your specific circumstances:
