Medicare Part D Prescription Drug Coverage

The Medicare prescription benefit, or Medicare Part D, was added to the program in 2003 under the Medicare Modernization Act.  Since then, there has been lots of confusion and misconceptions about the benefit.

There are 3 important parts of the prescription benefit:
1)      Initial Coverage Period
2)      Coverage Gap (donut hole)
3)      Catastrophic Benefit

The Initial Coverage Period of part D may include a deductible of no more than $295 in 2009. A plan can offer a deductible less than that and as little as $0, but not any more than $295.  After the deductible has been met, the plan will cover at least 75% of the cost of prescription medications; the beneficiary will pay 25% copayment.  The plan could arrange this in a “flat fee”, such as $20 on generics or $35 on name brand prescriptions, but it cannot exceed 25%. The Initial Coverage Period continues this way until the total cost of medications reach $2,700.

At this point, the Coverage Gap, or the donut hole, begins. This is a period of time that the beneficiary must pay 100% of the medication costs, but also must continue to pay the Part D premium, until the out of pocket costs reach $4,350. This is the TROOP, or “true out of pocket” for the beneficiary, not the total cost of medications.

If a beneficiary pays more than $4,350 out of pocket, then the Catastrophic Benefit will begin. During this time, the government pays 95% of the cost of the medications for the remainder of the year.  This process restarts every year in January.

For some, there is extra help.  Those with low income and limited resources can apply for financial assistance through Social Security or state Medicaid office.

Annual Enrollment Period is each year November 15^th – December 31^st. During this time, you can re-evaluate your current coverage and switch plans.  You can apply for Extra Help any time during the year.

This is video was produced in cooperation with Mary Beth Best, Medicare Advocate with Voice, Inc.