The new Medicare prescription drug coverage began on January 1, 2006. Everyone with Medicare can get this coverage that in most cases will lower your prescription drug costs and help protect against higher costs in the future. Medicare Prescription Drug Coverage is insurance. You choose the drug plan and pay a monthly premium.
If you have limited income and resources, you may get extra help to cover prescription drugs for little or no cost. The amount of the monthly premium is not affected by your health status or how many prescriptions you need. You will also pay a share of the cost of your prescriptions.
The decision to get Medicare prescription drug coverage depends on how you pay for your drugs now and how you get your Medicare coverage.
Original Medicare only, or Original Medicare and a Medigap ('Supplement')Policy without drug coverage. The new Medicare drug coverage covers half of the costs for you if you have this kind of coverage now. Enhanced options are available that provide more coverage.
Original Medicare and a Medigap ('Supplement') Policy with drug coverage. The new Medicare drug coverage generally provides much more comprehensive coverage at a lower cost.
Retiree or Union coverage:
In most cases, people with good retiree or union coverage can continue to get it, with new financial support from Medicare.
Medicare Advantage Plan (like an HMO or PPO) or other Medicare Health Plan, which already include drug coverage and other extra benefits.
Dual coverage from Medicare with Medicaid drug coverage. These people automatically got comprehensive prescription drug coverage from Medicare beginning on January 1, 2006.
The Standard Drug Benefit
The standard benefit is defined in terms of the benefit structure, not the particular drugs that must be covered. For 2008, the standard benefit includes an initial $275 deductible. After meeting the deductible the beneficiaries pay 25% of the cost of covered Part D prescription drugs, up to an initial coverage limit of $2,510. Once the initial coverage limit is reached, beneficiaries are subject to another deductible, known as the "Donut Hole," or "Coverage Gap," in which they must pay the full costs of drugs. When the total out-of-pocket expenses on formulary drugs reach $4,050 - including the costs of the deductible and coinsurance - beneficiaries reach the "Catastrophic Coverage " benefit. Beneficiaries entitled to Catastrophic Coverage pay $2.25 for a generic or preferred drug and $5.60 for other drugs, or a flat 5% coinsurance, whichever is greater. This out-of-pocket amount is calculated annually. Beneficiaries who reach the $4,050 out-of-pocket threshold in one year have to begin to meet it again on January 1st of the next year.
Because the deductible, initial coverage limit, and annual out-of-pocket threshold change each year according to the changes in expenditures for Part D drugs, beneficiary out-of-pocket expenses may increase annually.
The annual enrollment period for Medicare Part D is November 15 - December 31. During this period people with Medicare can enroll in a plan or change their enrollment from one plan to another.
How Much Will the Plans Cost?
When you get Medicare prescription drug coverage, you pay part of the costs, and Medicare pays part of the costs. You pay a premium each month to join the drug plan. If you have Medicare Part B, you also pay your monthly Part B premium. If you belong to a Medicare Advantage Plan or a Medicare Cost Plan, the monthly premium you pay to the plan may increase if you add prescription drug coverage.
Your costs will vary depending on which plan you choose and where you live. Your plan must at a minimum provide you with a standard level of coverage. Some plans offer more coverage or lower premiums.
