Medicare Plans

What Are My Options for Medicare Prescription Drug Coverage (Part D)?

Medicare offers prescription drug coverage (Part D) to everyone with Medicare. To get Medicare drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and drugs covered. There are two ways to get Medicare prescription drug coverage:

• Medicare Prescription Drug Plans. These plans (sometimes called "PDPs") add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
• Medicare Advantage Plans (like an HMO or PPO) or other Medicare health plans that offer Medicare prescription drug coverage. You get all of your Part A and Part B coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called "MA-PDs."

Why Join a Medicare Drug Plan?

Even if you don't take a lot of prescription drugs now, you should still consider joining a Medicare drug plan. If you decide not to join a Medicare drug plan when you are first eligible, and you don't have other creditable prescription drug coverage (also called creditable coverage), you will likely pay a late enrollment penalty (higher premiums) if you join later.

Note: Discount cards, doctor samples, free clinics, drug discount Web sites, and manufacturer's pharmacy assistance programs aren't considered prescription drug coverage and aren't creditable coverage. If you have limited income and resources, you may qualify for Extra Help from Medicare to pay for prescription drug coverage. You may also be able to get help from your state.

Who Can Get Medicare Drug Coverage?

To join a Medicare Prescription Drug Plan, you must have Medicare Part A and/or Part B. If you would like to get prescription drug coverage through a Medicare Advantage Plan, you must have Part A and Part B. You must also live in the service area of the Medicare drug plan you want to join.

If you have employer or union coverage, call your benefits administrator before you make any changes, or before you sign up for any other coverage. If you drop your employer or union coverage, you may not be able to get it back. You also may not be able to drop your employer or union drug coverage without also dropping your employer or union health (doctor and hospital) coverage. If you drop coverage for yourself, you may also have to drop coverage for your spouse and dependants.

When Can You Join, Switch, or Dis-enroll from a Medicare Drug Plan?

Enrolling into a Medicare Drug Plan or switching plans may be done at these times:

• You can join when you are first eligible for Medicare (the 7 month period that begins 3 months before the month you turn age 65, includes the month you turn age 65, and ends 3 months after the month you turn age 65).
• If you get Medicare due to a disability, you can join during the 3 months before to 3 months after your 25th month of disability. You will have another chance to join 3 months before the month you turn age 65 to 3 months after the month you turn age 65.
• Plan changes may be requested during the Annual Election Period, which runs from October 15 - December 7 each year. Your new coverage begins on January 1 of the following year, as long as your enrollment request is received by the plan on time.
• You may enroll in a new Medicare Drug Plan during the Medicare Advantage Disenrollment Period (runs from January 1 – February 14 each year), if you are dis-enrolling from a Medicare Advantage Plan during that time. Your new drug coverage begins on the first day of the month following the date the plan receives your enrollment form.
• Anytime, if you qualify for Extra Help or if you have both Medicare and Medicaid.

In most cases, you must stay enrolled for that calendar year starting the date your coverage begins. However, in certain situations, you may be able to join, switch, or drop Medicare drug plans during a special enrollment period (like if you move out of the service area, lose other creditable prescription drug coverage, or live in an institution).

What You Pay

Exact coverage and costs are different for each Medicare drug plan, but all plans must provide at least a standard level of coverage set by Medicare. Your actual drug plan costs will vary depending on the prescriptions you use, the plan you choose, whether you go to a pharmacy in your plan's network (and with some plans, if you utilize the plan's preferred mail-order pharmacy), whether your drugs are on your plan's formulary, and whether you qualify for Extra Help paying your Part D costs.

The following points show the components of a Medicare Part D Drug plan:

• Monthly premium-Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B premium. If you belong to a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium may include an amount for prescription drug coverage.
• Yearly deductible-Amount you pay for your prescriptions before your plan begins to pay. Some drug plans don't have a deductible. In 2012, the deductible cannot exceed $320.
• Copayments or coinsurance-Amounts you pay at the pharmacy for your covered prescriptions after the deductible. You pay your share, and your drug plan pays its share for covered drugs.
• Coverage gap-Most Medicare drug plans have a coverage gap. This means that after you and your drug plan combined have spent a certain amount of money ($2,930 for 2012) for covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit. Your yearly deductible, your coinsurance or copayments, and what you pay in the coverage gap all count toward this out-of-pocket limit. The limit doesn't include the drug plan's premium or what you pay for drugs that aren't on your plan's formulary. There are plans that offer some coverage during the gap, such as for generic drugs. However, plans with gap coverage may charge a higher monthly premium. Starting last year and continuing into 2012, Medicare Part D beneficiaries have been offered a 50% discount on name brand prescription medications while in the "donut hole". Now, Medicare Part D beneficiaries will also be offered a 14% discount on all generic brand prescription medications while in the "donut hole" (it was only 7% in 2011). The coverage gap will be eliminated by 2020.
• Catastrophic coverage-Once you reach your plan's out-of-pocket limit during the coverage gap, you automatically get "catastrophic coverage". Catastrophic coverage assures that once you have spent up to your plan's out-of-pocket limit for covered drugs, you only pay a small coinsurance amount or copayment for the drug for the rest of the year (in 2012, once you've spent $4,700 out-of-pocket for the year, you get catastrophic coverage).

Note: If you get Extra Help paying your drug costs, you won't have a coverage gap and will pay only a small or no copayment once you reach catastrophic coverage.

Back to Top | Back to Medicare Plans Home

• The Different Parts of Medicare
• When Do I Sign Up for Medicare Parts A & B?
• How Much are Medicare Premiums, Deductibles and Coinsurance Rates in 2012?
• Can I Choose Medicare Advantage (Part C) Instead of Medicare Parts A & B?
• How Medicare Advantage Plans Work
• Are There Other Kinds of Medicare Health Plans?
• What Are My Options for Medicare Prescription Drug Coverage (Part D)?
• What Are Medigap (Medicare Supplement Insurance) Policies?
• What Are the Changes Being Made to Medigap on June 1st, 2010?