Medicare Prescription Drug Coverage, or Part D, is a drug plan that adds coverage to Original Medicare or Medicare Supplemental plans. Medicare Part D plans are provided by private health insurance companies that have been approved by Medicare. It is a federal program enacted in order to subsidize prescription drugs for Medicare beneficiaries. Medicare prescription drug coverage is insurance that covers generic and brand-name drugs and provides protection for people who have very high drug costs.
Enrollment is voluntary for most beneficiaries. If you are dually eligible (those eligible for both Medicare and Medicaid), you are automatically enrolled in one of the less expensive prescription drug plans. Medicare beneficiaries may sign up when they first become eligible for Medicare; three months before to three months after your 65th birthday. Beneficiaries, who are not automatically enrolled in Medicare Part D, can do so during the enrollment period that starts on November 15 and goes through December 31. You may have to pay a penalty if you did not enroll when you first became eligible.
So, how does Part D work?
For 2009, all Medicare Part drug plans have a $295 deductible. After you meet the deductible, you pay for 25% up to an initial coverage limit of $2,700. Once the initial coverage is reached, you are subject to another deductible otherwise known as the "donut hole." The "donut hole" is a gap in coverage in which you must pay the full costs of drugs. If you go beyond the "donut hole" and reach $4,350, you have reached "catastrophic coverage" and are only entitled to pay $2.40 for generic or preferred drugs and $6.00 for other drugs.
You also have a Medicare Part D premium, in addition to the premium you are paying for Medicare Part B. Monthly premiums vary according to plan and geographic location but the average is $24.40.
Drugs covered under Medicare Part D vary by plan. However, Medicare prescription drug plans are required to cover at least 2 options in each drug category. A drug category or class is the group that a specific drug belongs to based on what the drug is used for. Examples include antibiotics, diuretics or antidepressants. Most plans have a formulary, or a list of drugs covered by that particular plan. This list meets Medicareâ€™s requirements but is always changing due to the introduction of new drugs. All Medicare drug plans must make sure that the people on their plans can get medically-necessary drugs to treat their conditions and illnesses.
There are certain types of drugs that are not covered by any standard Medicare drug plan. These drugs include:
- Benzodiazepines such as Xanax or Valium
- Drugs used for anorexia, weight gain, and weight loss
- Fertility drugs
- Drugs for cosmetic purposes
- Over the counter drugs
- Prescription vitamins and mineral products