You have options when it comes to Part D outpatient prescription drug coverage. Consider your current situation and what your options are before making a decision. If you:
- Do not have outpatient prescription drug coverage: You need to know that no one has to participate in Part D. However, if you do not sign up during your Initial Enrollment Period, you may have to pay higher premiums if you enroll at a later date.
- Have outpatient drug coverage through a retiree plan, your spouse’s work, a union or other program: You may keep that if you wish. If you decide to keep the plan you have, it is VERY IMPORTANT that you make sure your drug plan covers as much or more than a Part D drug plan (this is called creditable coverage). If it does not (this is called non-creditable coverage), and you decide later to sign up for a Part D drug plan, you may have to pay higher premiums. You can call Medicare at 1-800-633-4227 (TTY 1-877-486-2048) to see if the plan you have now is as good as a Part D drug plan. You should also get a notice from your employer or union that tells you if your plan covers as much or more than a Part D drug plan.
If you didn’t enroll in Part D during your Initial Enrollment Period and you still have outpatient prescription drug coverage through your Medigap (Medicare Supplement) policy (Plans H, I or J), you have the following options:
- Do nothing, and your coverage will stay as it is today.
- Enroll in Part D coverage and keep your current Medigap (Medicare Supplement) policy minus the outpatient prescription drug benefits.
- Enroll in Part D coverage and choose another Medigap (Medicare Supplement) policy that does not offer outpatient prescription drug benefits. You may have Guarantee Issue rights with your current Medigap (Medicare Supplement) policy to enroll in Plans A, B, C or F.
Plan Benefits That Are The Same Or Better Than A Standard Plan Set By Medicare
Medicare has established a Standard Plan of benefits for Part D prescription drug coverage, but all Part D prescription drug plans will be offered by private companies. Each company is allowed to offer at least two (2) different outpatient prescription drug plans in 2007. These plans may offer you benefits that are better coverage than the Government’s Standard Plan or offer coverage packages that are similar but not quite the same as the Standard Plan, but each company must offer at least one plan with benefits that are at least as valuable (actuarially equivalent benefits) as the Standard Plan.
Here is an example of the annual benefits per person based on the Standard Plan set by Medicare for 2007:
| Total Prescription Cost |
Medicare Pays |
You Pay |
| $1 - $265 |
$0 |
cost incurred, up to $265 |
| $266 - $2,400 |
75% |
25% of cost incurred, up to $534 |
| $2,401 - $5,451* |
$0 |
cost incurred, up to $3,051 |
| $5,452 and above |
Approximately 95% |
Greater of: $2.15 co-pay for generic, $5.35 co-pay for name brand, OR 5% coinsurance |
*Actual range is $2,401 - $5,451.25
Since there is a choice of plans available, the exact cost will depend on which plan you choose. The average national monthly premium for the Standard Plan set by Medicare will be $27.35 per month. People with low incomes may receive assistance in paying the premium. You may also enroll in a plan that offers more benefits than the Standard Plan, but you could pay a higher premium for one of these enhanced plans.
You also need to be aware that each year the premium, deductibles and coinsurance can change.
Network and Formulary requirements
All Part D prescription drug plans will be offered by private companies. In most cases, you will be required to use only the plan’s network pharmacies in order to receive full plan benefits and you may be limited to a formulary, which is a list of specific drugs covered by the plan you choose. Not all drugs are covered by all plans.
You need to be mindful of these formularies when choosing a Part D plan. Some plans might only cover drugs that are included in their formulary. Others might cover a broader range of drugs but you might be required to pay higher co-pays for the non-formulary drugs.
The pharmacies in the plan’s network and the drugs included in their formulary can change periodically. If the formulary or pharmacy network changes, you will receive a notice from your Part D plan administrator.
People With Low Income Will Receive Help With Premiums And Co-Pays
There will be no premiums or deductibles for your Part D coverage if you are on Medicaid or if your income meets certain requirements. You will only be required to make co-payments of a few dollars for each covered prescription drug.
If you do not qualify for the assistance listed above but still meet other low income requirements, you may be eligible for reduced Part D premiums, deductibles and co-payments. The Government may also review how many assets you own for this qualification process.
The income requirements for low income assistance vary by state and are subject to change every year. To find out if you are eligible for low income assistance, contact the Social Security Administration at 1-800-772-1213 (TTY 1-800-325-0778).
Medicare-Approved Drug Discount Cards And Part D The Medicare-approved drug discount cards that became available in May 2004 were offered as a transition step to help people with Medicare save money on prescription drug costs until Part D prescription drug plans became available.
Medicare-approved drug discount cards are no longer effective, as of May 15, 2006.
Other Drug Discount Cards And Part D
You may have a drug discount card that was issued by your insurance company, your local pharmacy, your former employer or some other source. If you have one of these discount cards, you can keep it when you enroll in Part D. You will want to show your pharmacist your Part D card and your other drug discount card when purchasing drugs and ask which one gives you the best benefit. Keep in mind that if you use the discount card instead of Part D when purchasing drugs, the expense may not count toward your Part D plan deductible or your true out-of-pocket cost (TROOP).
Making a Decision On Your Prescription Drug Coverage
If you have Medicare but missed your Part D Initial Enrollment Period, you can still sign up during the Part D Annual Enrollment Period, which is from November 15th through December 31st every year.
Sources Referenced
- www.medicare.gov
- Medicare’s Medicare & You
- Centers for Medicare & Medicaid Services
- Senator Bob Dole’s Ten Things You Need To Know About Medicare’s New Prescription Drug Coverage
- Walgreens’ Introduction to Part D: Medicare’s New Prescription Drug Coverage
- Kaiser Family Foundation’s Talking About Medicare: Your Guide to Understanding the Program
