Medicare Part D: Prescription Drug Program

Medicare Part D is the Centers for Medicare and Medicaid Services’ (CMS) insurance program for prescription drugs. Part D plans are available through private insurance programs (prescription drug plans or PDP) and Medicare Advantage plans (MA-PD). Medicare Advantage plans include HMOs or PPOs. Everyone with Medicare is eligible for prescription drug coverage as long as you are enrolled in Part A or Part B, regardless of income and resources, health status, or current prescription expenses.

What will Medicare Part D cover?

Medicare Part D covers brand name and generic prescription drugs (drugs for which your doctor writes an order). It does not cover over-the-counter drugs. Each prescription drug plan and HMO/PPO has developed its own list of covered drugs or “drug formulary.” Medicare Part D will cover those drugs in your specific plan’s formulary. For example, if you take a specific drug and it is in your plan’s formulary, Medicare Part D will cover it and the cost for the drug will count towards your deductible and co-insurance amounts. If your drug is not in your plan’s formulary, Medicare Part D may not cover it and its cost may not be counted towards your deductible and co-insurance amounts, even if that drug is in another plan’s formulary. The formularies will vary from plan to plan, so it is important to compare plan formularies to see which one works best for you.

What does it cost?

Medicare Part D is an insurance policy and like all insurance policies, you will pay a monthly premium and a share of cost of your prescriptions. As of 2014, Medicare beneficiaries pay a Part D premium is based on their income. You will pay your regular plan premium plus an extra amount that is based on your income. The “extra” amount is based on your adjusted gross income on your IRS tax return from two years ago.

Medicare has established a standard basic plan, but your prescription drug plan or HMO/PPO plan may vary from the standard basic plan. According to the standard basic plan, in 2014, you will pay for the first $310 of your drug costs per year. After you pay this $310 deductible, you pay 25% of your yearly drug costs.

Once you and your plan have spent $2,850 on covered drugs (deductible is included), you are in the coverage gap, also called the “donut hole.” In 2014, you will pay 47.5% of the cost for brand name drugs and 72% for generic drugs (plus a nominal pharmacy dispensing fee during the coverage gap).

What if I have Medicare and Medi-Cal?

If you have Medicare and full Medi-Cal, you will need to join a Medicare Part D plan to pay for your medications. If you do not join a plan, a Part D plan will be assigned to you automatically.

Not all plans will cover all medications, so review your assigned plan carefully if you are assigned to a plan automatically. You may need to change to a different drug plan to be sure that all your drugs are covered and your drug store has a contract with your plan. You can switch plans at any time.

What if my income is limited, but I don’t qualify for Medi-Cal?

You may apply for “Extra Help” to pay for a Medicare Part D plan through the Social Security Administration or by calling 1-800 MEDICARE (633-4227). Visit www.medicare.gov to find out if you are eligible for this Extra Help. You are eligible for Extra Help if you qualify for Medicare Savings Programs which help you pay for Medicare Part A and Part B plans.

What if I have a Medicare supplemental plan?

The supplemental Medicare insurance policies or Medigap policies sold since 2006 do not include prescription drug coverage, so you should decide to purchase a Medicare Part D plan. If you purchased your Medigap policy before 2006 and it did include drug coverage, you should have received a letter from your insurance company telling you that your current drug coverage is “not as good as Part D coverage.” Because the drug coverage is “not as good as Part D coverage,” you had the opportunity to enroll in a Part D prescription drug plan in 2006. If you did not purchase a Medicare Part D plan last year and decide to enroll in a Medicare Part D plan at this time, you will pay the penalty for late enrollment.

I have drug coverage through my HMO; do I need to buy a Medicare Part D plan?

If you belong to an HMO, you should check to see if it is a plan that covers prescription drugs or not. Some plans may charge an additional premium for drug coverage, so check your plan carefully.

I have drug coverage through an employer or union plan; do I need to buy a Medicare Part D plan?

If you currently have drug coverage through your, your spouse’s or other family member’s current or former employer or union plan (including a retirement plan), your plan should notify you each year if the plan is creditable. If creditable, you may keep your current drug coverage and not be penalized if you should decide to enroll in a Medicare Part D plan at this time or in the future.

I don’t take a lot of prescription drugs; why should I consider enrolling in Medicare Part D?

If you don’t currently take prescription drugs, you should still consider joining a Medicare drug plan. As we get older, most people need prescription drugs to stay healthy. For most people, joining a Medicare Part D plan when you are first eligible means you will pay the lowest possible monthly premium. If you don’t join a plan when you are first eligible and you don’t currently have a drug plan that, on average, covers at least as much as standard Medicare prescription drug coverage, you may enroll in a Medicare Part D plan during the Annual Election Period (October 15 – December 7). When you do join, you will have to pay a penalty in addition to your monthly premium cost. The penalty is 1% of the national average premium for every month you were eligible but did not sign up. You must pay this penalty as long as you have Medicare prescription drug coverage.

How Do I join a Medicare Part D plan?

You can join a Part D plan online by using the Medicare Plan Finder or by calling 1-800-MEDICARE (1-800-633-4227).

When can I sign up for a Part D plan?

You may sign up for Medicare Part D when you first become eligible for Medicare. If you don’t sign up when you are first eligible, you may pay a penalty if you choose to join later. If you are already enrolled in a Part D plan, you have from October 15 to December 7 to change plans. If you are happy with your drug coverage, and your Medicare drug plan is still offered in your area, you don’t have to do anything for your coverage to continue.

How do I prepare to make a decision about Medicare Part D?

You can begin by making a list of prescription medications that you are currently taking, including:

Name of each drug
The dose (pill strength)
How often you take the drug (for example, one tablet two times daily)
What you pay for each drug

All of this information can be found on your prescription bottles or the print out your pharmacy provides when you pick up your prescriptions.

Free health insurance counseling through the Health Insurance Counseling and Advocacy Program (HICAP) is also available if you would like some assistance with deciding on a Part D plan or any Medicare related issues. You may make an appointment to see a HICAP counselor at Orange County Buddhist Church at (714) 827-9598, or call HICAP at (800) 434-0222 for the location of other counselors. You can attend community education sessions to learn as much as you can about the Medicare prescription drug benefit, or you may call The Institute for Healthy Aging at Keiro [LINK?] at (323) 980-2353 if you have questions.