Medicare Part D insurance is health care coverage that helps beneficiaries pay for the costs of prescription drugs. You can obtain Part D coverage in two different ways. If you have Part A and/or Part B, you can enroll in a stand-alone prescription drug plan that works in conjunction with your Original benefits. Or, if you have both Part A and Part B, you can enroll in an Advantage Plan (Part C) that includes prescription drug coverage. According to federal law, everyone who is eligible for Part A and/or Part B is also eligible for a prescription drug plan. These are the two ways you can get coverage:
Prescription Drug Plan (PDP): This is a separate, stand-alone insurance you can buy in addition to Part A and B or a Supplement (Medigap) insurance plan.
Advantage Plan: You can combine Part A, Part B, and Part D coverage into one comprehensive plan. Many Advantage Plans include Part D, but some do not.
How Much Does it Cost for Medicare Part D?By law, all Part D plans must offer at least the basic benefits Medicare requires. Plans can offer more benefits, but you’ll likely pay a higher premium for the improved coverage. Basic Benefits Required by Medicare in 2016
Initial Coverage Limit*: $3,310.00
Out-of-Pocket Threshold**: $4,850.00
*After an individual pays the deductible, he or she is in the initial coverage period during which he or she pays 25 percent of drug costs and the Part D plan pays 75 percent of costs. Once Part D drug expenses (paid by the individual and by the Part D plan) total the initial coverage limit ($3,310 for 2016), the individual is responsible for a certain percentage of charges based on whether the drug is generic or brand until the individual has reached the out-of-pocket threshold. **The out-of-pocket threshold is the amount that the individual must pay on his or her own before catastrophic coverage begins. This gap between the initial coverage limit and catastrophic coverage is referred to as the “donut hole.”
***For Part D plans that charge copayments in the catastrophic portion of the benefit (instead of 5 percent coinsurance), the amount of the copayment for a generic drug or for a preferred multiple source drug (i.e., generally one for which there are two or more products that are therapeutically and pharmaceutically equivalent) is set at a lower amount than the amount for any other drug.
The Part D Coverage Gap Since its inception, Part D coverage has included a coverage gap or “donut hole.” This refers to the period after you reach the Initial Coverage Limit but before you’ve met the Out-of-Pocket Threshold. This period can be difficult for some beneficiaries because their costs for prescription drugs will rise until they meet the final threshold. However, the Affordable Care Act (ACA), or “Obamacare,” provides discounts for certain drugs purchased while in the donut hole. These are the current coverage gap discounts set by the ACA:
Drugs Covered by Part D Medicare PlansEach Prescription Drug Plan has its own list of covered drugs called a formulary. A formulary is a list of the specific generic and brand-name prescription drugs that are eligible for coverage on a specific plan. These plans must cover certain categories of medications; however, the specific drugs within those categories may vary by insurance company. For this reason, make sure that any medications you take are covered before you enroll. Formularies can also change during the course of the year. If a change involves a drug that you are currently taking, the plan must send you a written notice at least 60 days before the date of the change. In some cases, at the time you request a refill, you may be provided a written notice of the change and a 60-day supply of the drug covered under the same rules that applied before the change. Generally, if your plan doesn’t cover a drug you take, it will give you a one-time, temporary supply of your current drug during your first 90 days of enrollment. This temporary supply allows you and your prescriber time to find another drug on the plan’s formulary (drug list) that will work as well as what you’re taking now. Alternatively, you or your prescriber can contact the plan to ask for an exception. There may be different rules for people who move into or already live in a long-term facility (like a nursing home or long-term care hospital).
Eligibility and EnrollmentTwo key factors are important in determining whether you are eligible to sign up. If you meet both of the following criteria, you are eligible for enrollment:
You’re enrolled in Part A or Part B (or both).
You currently live in the service area of at least one plan that provides prescription drug benefits.
If you meet these criteria, you’re allowed to sign up for these plans during certain periods. Initial Enrollment PeriodThis is when you can first enroll for prescription drug benefits. It begins three months prior to the month of your 65th birthday, and it ends three months after your 65th birthday month. This gives you seven full months to enroll during the Initial Enrollment Period. If you have a disability and are under age 65, your seven-month enrollment period starts three months prior to your 25th month of receiving Social Security or Railroad Retirement Board disability benefits, and it ends three months after your 25th month of receiving disability benefits. Annual Election PeriodFrom October 15 to December 7 each year, you can review and adjust your current drug coverage. If you didn’t sign up during the Initial Enrollment Period, you can also enroll in Part D coverage during the Annual Election Period. Advantage Disenrollment PeriodThis period, from January 1 to February 14 each year, allows you to switch from an Advantage Plan to Original Medicare if you wish. You then have until February 14 to add a stand-alone Part D Prescription Drug Plan. Special Enrollment Periods (SEPs)SEPs allow you to make changes to your prescription drug coverage outside of the normal enrollment periods. You may be eligible for an SEP for one of these circumstances:
You moved to a new address outside your plan’s service area
You become eligible for both Medicare and Medicaid
You moved back to the United States after living in another country
What Else Do I Need to Know about Part D? Here are a few more things to consider about selecting this type of coverage:
You can’t have drug coverage from both an Advantage Plan and a stand-alone Prescription Drug Plan. You’ll need to decide which combination of medical and prescription drug coverage is right for you.
Once you enroll, you’ll get an Annual Notice of Change (ANOC) each September. The ANOC tells you about any changes to your plan, including adjustments to costs, coverage, or service areas.
If you currently have prescription drug coverage from a current or former employer or union, your coverage must be as good or better than the benefit of a Part D plan for you to keep the employer plan. You should receive an annual notice from the plan sponsor notifying you whether your coverage meets the minimum standards.