Medicare Part D (Prescription Drug Plan)

With all the advertisements on television and print publications by insurance companies about Medicare Prescription Drug coverage, you may be perplexed about what plan is right for you and what exactly Medicare Part D covers. Part D coverage refers to a Medicare prescription drug plan that is offered as a Medicare-approved program by a private health insurance company.

Medicare Part D Plan Options

There are two main ways you can get prescription drug coverage when you are eligible for Medicare benefits.

  • Adding Part D to Another Medicare Plan
    When you sign up for original Medicare Part A and/or B, select Medicare Private Fee-For-Service Plans (PFFS), select Medicare Cost Plans, and Medicare Medical Savings Account Plans (MSA), you can add a Medicare Prescription Drug Plan (PDP) to help with the cost of your medications. These plans are provided by Medicare-approved private insurance companies at an additional monthly premium.
  • Medicare Advantage Plan (Medicare Part C)
    When you sign up for a Medicare Part C plan (MA plan, Medicare Advantage Plan), prescription drug coverage is often included in the plan benefits. MA plans are provided by private insurance companies, so each plan is different. You should read about your specific plan to see what it covers. A Medicare Advantage Plan always covers Part A and Part B treatments and services. When it also covers prescription drugs, it is sometimes called an MA-PD plan.

Medicare Part D Coverage

Part D plans cover prescription drugs. However, the specific terms of the plan and which medications are covered are set by the individual plan. They are established by the private insurance company that issues the plan and are subject to change.

The plan that is right for you may be determined by the terms of the plans, such as deductible, coinsurance, and copayment amounts. However, it may also be selected according to what medications are covered, if you have to take certain medications routinely.

Medicare Part D Costs

If you have chosen a Medicare Advantage Plan with Prescription Drug Coverage, the premium will be included in your MA plan (Part C) monthly premium.

If you are adding a Medicare Part D plan to your Part A and B coverage, you will need to pay another monthly premium in addition to your Part B premium. This is also true if you are adding a Part D plan to another insurance plan which does not already cover medications. The monthly premium for your Part D plan will depend on the premium amount set by the private insurance company offering the plan.

A small amount of people enrolled in Medicare meet higher income status. In fact, it is less than five percent of all Medicare recipients. If you meet higher income status, you will have to pay a higher premium per month. Higher income is determined by your reported income to the IRS. It applies if you are an individual who makes more than $85,000 a year or a married couple who makes over $170,000 annually.

If you want to know what plans are offered in your area, you can enter your information into the www.Medicare.gov website and find prescription drug plans to compare.

If you would like your premium automatically deducted from your social security check, many insurance providers offer this option. You simply call the private company offering your plan to set up automatic withdrawals.

After your premium amount, there will be other costs associated with your Medicare Part D plan, including deductible amounts, copayments, coinsurance, and more. There is a coverage gap in most Part D plans that occurs when you and your insurance company have reached a certain amount of spending on prescription drugs. When you are in the gap, there are limits on how much of the drug cost your insurance will pay.

During the coverage gap (sometimes called the "Donut Hole"), you will get a discount of 50% from the manufacturer on brand name drugs. In addition, you will only pay 85% of the cost of generic drugs. The retail price, rather than the discounted one, goes toward 'out-of-pocket spending' levels. This helps you get past the gap in coverage more quickly.

Medicare Part D Enrollment

Most people either become eligible for enrollment in Medicare when they turn 65 years old or twenty five months after they start receiving disability benefits from Social Security or the Railroad Retirement Board. At this time, you have your initial enrollment period. For those turning 65, the initial enrollment period is a seven month period, including the three months before the month of your birthday, the month of your birthday, and the three months following the month of your birthday. For those who are disabled, the initial enrollment period starts the 21st month after you start receiving disability benefits and ends in the 27th month.

If you miss your initial enrollment period and you enroll in Medicare Part B during the general enrollment period, you can enroll in Part D between April 1 and June 30. If you wait, you may have to pay a late enrollment penalty.

There is also an open enrollment period for those who wish to make changes to their Medicare Part D (or Part C) plans. This period is from October 15 to December 7, each year.