Medicare Part D Coverage

Medicare Part D coverage subsidizes the cost of prescription drugs for Medicare beneficiaries. People must be enrolled in Parts A or B to be eligible for Part D. Plans are established with private insurance companies approved by Medicare, and there are various plans for seniors to choose from. Seniors must enroll within three months of turning 65 to avoid penalties.

Plans each include a formulary of the drugs they cover. Not all plans cover all drugs, nor do they cooperate with all pharmacies. Seniors shopping for Medicare Part D coverage plans should carefully compare the plans against the drugs they take and their preferred pharmacies.

The formularies also list where each drug falls on the co-pay tier, which indicates how much the patient must pay out-of-pocket. When Medicare beneficiaries enroll in a Part D plan, they receive a card to present to the pharmacist at the time of payment. Depending on the level of coverage, the patient must then pay a co-pay, co-insurance or deductible.

Which Drugs are Covered

Each Medicare Part D coverage plan has a different formulary of the drugs covered, but common drugs are covered by most plans. If there is a drug that is not covered, the beneficiary can apply for an exception. In general, Medicare Part D plans cover all prescriptions that are not for cosmetic or elective purposes. Other classes that are generally not covered are barbiturates and benzodiazepines (sedatives).

Doctors can apply for exceptions if the excluded drugs are deemed medically necessary. Beneficiaries are also subject to some restrictions regarding the allowable drugs. Medicare Part D coverage may require step therapy, whereby patients must try less expensive versions of a drug before getting the preferred brand. There may also be a limit on the quantity a patient can buy at one time.

Most Medicare Part D coverage plans will subsidize vaccines that are medically necessary. Vaccines covered by another Medicare plan are excluded, but all other commercially-available vaccines are covered. It is in the insurance company's best interest to subsidize preventative measures to keep their clients well.

Drugs prescribed in hospital out-patient services may be covered under Medicare Part D coverage. These self-administered drugs are not typically included on the formulary, so patients must submit a claim to their drug plan for a refund after paying out-of-pocket. Beneficiaries can also submit the bill for the medication to the insurance company to request it be covered.

Coverage Gap

The Medicare Part D coverage gap, also known as the "Donut Hole," is the difference between the initial coverage amount limit and the catastrophic coverage level. People in the Donut Hole find themselves abruptly paying for 100 percent of the drug costs temporarily until they reach their out-of-pocket limits. This can be a scary time for seniors on fixed incomes.

The limits change each year, but the Donut Hole generally works as follows: Part D participants are responsible for the initial $310 of their drug costs, the deductible. Once the deductible is met, participants pay a co-pay or co-insurance on each prescription, and the plan pays its share. Once the total expenditure--including the deductible, co-pay or co-insurance and plan payout--reaches $2,840, the Donut Hole sets in. The patient then pays for the drugs out-of-pocket with some applied discounts. When that total expenditure reaches $4,550--including out-of-pocket costs, deductibles and co-pays/co-insurance--the gap ends, and participants pay a small co-pay for the remainder of the year.[1]

Not everyone reaches the Donut Hole. People taking many prescriptions or very expensive prescriptions are more likely to see a gap that may last several months. During this time, plan participants receive a 50 percent manufacturer's discount on select name brand drugs. Although patients are only paying 50 percent of the cost out-of-pocket, the entire cost counts toward their out-of-pocket limit, moving them out of the gap faster. People taking generic drugs receive a 7 percent discount off the plan's price.

Inadequate Coverage

People who are in the Donut Hole or those who cannot afford their prescriptions with Medicare Part D coverage are eligible for various assistance programs. Some pharmaceutical companies offer pharmaceutical assistance programs that help defray the costs of prescription drugs, and the states also offer assistance for low income residents. Medicare Part D beneficiaries who meet the income and resource requirements may also be eligible for government subsidies like Medicaid and Medigap. Social Security has a prescription drug program for low income seniors that subsidizes drugs so they cost only $1 to $6 per prescription.

Some Part D plans offer stop-gap coverage for an additional premium. People who estimate that they will fall into the Donut Hole in the future may find that increased monthly payment to be a worthwhile investment. No matter how inadequate a Medicare Part D coverage plan is, it is vital that seniors stick to their prescription regimens.

http://www.medicarerights.org/pdf/Health-Reform-Doughnut-Hole-in-2011.pdf Retrieved 2011-09-01

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