Medicare--the federal government-sponsored health insurance program for the elderly and disabled--provides health coverage for most Americans over age 65 and for those considered permanently disabled.
However, Medicare enrollees often are surprised to find the program does not cover all their medical expenses. The Medicare program actually is split into four parts: Part A (hospitalization), Part B (physician and outpatient services), Part D (drug coverage) and Medicare Advantage managed care plans (Part C). This article provides information on Medicare Part D prescription drug plans.
Medicare Drug Plans Main Option for Prescription Coverage
Medicare drug plans are offered by private insurance companies and other private companies and are approved by Medicare. Beneficiaries should consider purchasing a prescription drug plan unless they are enrolled in a Medicare Advantage managed care plan that already pays drug costs.
Prior to the advent of the Medicare prescription drug benefit in January 2006, Medicare did not pay for most prescription drugs. Now, with a Medicare drug plan, beneficiaries generally pay less for prescriptions, although most drug plans have lists of preferred drugs and beneficiaries may pay more for a drug that's not on the preferred list.
Unlike Medicare Part A and Part B benefits, which are set, benefits vary between Part D plans and beneficiaries can choose and join the plan that best meets their needs. Someone who has just turned age 65 can join a drug plan at the same time as enrolling in Medicare; in most cases, beneficiaries who don't join a Part D plan when they first are eligible must wait until the next Medicare drug plan "open season," which occurs between November 15th and December 31st each year.
Beneficiaries who fail to buy a Part D plan when they first become eligible also pay a penalty if they decide later to purchase the prescription drug coverage.
Coverage Varies Widely by Medicare Drug Plan Chosen
Because they are offered by private insurers and other companies, Medicare prescription plans vary tremendously in coverage and benefits. Plans also have different co-payment and deductible requirements, although the deductible cannot be higher than $310 in 2010. Generally speaking, the less expensive the plan, the higher out-of-pocket costs can be for the beneficiary. The average premium for Medicare drug plans is $30 in 2010.
Many Medicare drug plans will have a formulary, which is a list of approved drugs. If a patient's physician prescribes a drug that's not on the formulary, the plan may require a substitute. And, some drugs are excluded from standard Medicare prescription drug coverage, although an insurer can choose to include those drugs as part of a premium package.
In addition, many Part D plans have what's called the coverage gap or "donut hole." In these plans, once the beneficiary reaches a set level of spending ($2,830 in 2010), she must pay the full cost of all prescription drugs until she has spent $4,550 out-of-pocket. At that point, the Part D plan will pay for everything for the rest of the year.
Many Companies Offer Medicare Part D Plans
Choices for Medicare drug plans can be overwhelming, especially in regions where there's lots of competition. In 2010, 12 companies offered national Part D plans: Aetna Inc., CIGNA, Coventry Health Care Inc., CVS Caremark Corp., Health Net Inc., HealthSpring Inc., Humana Inc., Medco Health Solutions Inc., Torchmark Corp., UnitedHealth Group Inc. (in conjunction with AARP), Universal American Corp., and Wellpoint Inc.
Medicare advises beneficiaries to talk to their caregivers to help determine what drug coverage meets their needs. In addition, tools are available on the Medicare website to help beneficiaries narrow down their Medicare drug plan options.
Jane Anderson - Jane M. Anderson spends as much time as possible on the water, working and sailing on boats. She grew up sailing Sunfish and Rhodes 19s on ...
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