Medicare Prescription Drug Plans
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What are Prescription Drug Plans?
Medicare Prescription Drug Plans are private insurance plans that cover some of the costs of prescription drugs for people with Medicare. Medicare drug plans are also called Medicare Part D. There is no single Medicare prescription drug plan. There are a variety of plans, with different costs and benefits. All plans must be approved by Medicare.
Private insurance companies that offer Medicare drug plans get subsidies from the federal government to help cover their costs. People who join prescription drug plans also share in the costs. Drug plan members pay monthly premiums, annual deductibles, coinsurance/copayments, and a coverage gap. People with limited income and resources can get extra help to pay some or all of these costs.
Medicare Part D started January 1, 2006.
Am I eligible?
All people with Medicare can get prescription drug coverage. There are no income or asset limits. Your health status does not matter. You will not be turned down or charged more because you are in poor health or because your current prescription drug costs are very high.
People with Medicare can get drug coverage in one of two ways:
- by joining a Medicare Advantage Plan or other Medicare Health Plan with Medicare drug coverage included
- by joining a separate Medicare Prescription Drug Plan
You do not have to join a Medicare drug plan if you do not want to. It is your choice. However, if you do not join a plan when you are first eligible, you will be charged a penalty if you decide to join at a later date. There is an exception if you have drug coverage at least as good as Medicare drug coverage through your employer or union. This is called creditable coverage.
What benefits will I get?
Medicare drug plan benefits vary from one plan to another. On average, Medicare drug plans cover about 50% of prescription drugs costs. The benefits you will get depend on your prescription drug needs, the plan you choose, and whether you qualify for extra help with drug plan costs.
All Medicare Prescription Drug Plans offer these minimum benefits, effective January 1, 2009:
- An annual deductible no greater than $295 ($310 in 2010)
- Average monthly premiums of about $28 for standard prescription drug coverage ($32 in 2010)
- Average coinsurance rates of 25% after the deductible and up to the total drug cost benefit limit of $2700 ($2830 in 2010)
Note: There is a coverage gap after the benefit limit is reached, until out-of-pocket payments reach $4350 ($4550 in 2010)
- 95% coverage for prescription drugs after the out-of-pocket limit has been reached
- Coverage for a wide range of drugs in the most commonly prescribed categories (does not include barbiturates, benzodiazepines, and over-the-counter drugs)
- An appeals process for drugs not included in the plan's formulary
Some of the major differences in the plans are:
- Different plans have different monthly premiums, annual deductibles, and coinsurance rates
- Some plans pay a part of the costs during the coverage gap
- Some plans let you use many different pharmacies; some plans only let you use a few pharmacies
- Some plans offer a 90-day supply option
- Some plans offer a mail-order option
- Each plan has its own list of drugs covered by the plan (drug formulary). Drugs that are covered by one plan might not be covered by another.
- Most plans have prescription drug levels or tiers. Generic drugs usually cost less than brand name drugs.
What are the costs?
People who join Medicare drug plans pay part of the costs of prescription drug coverage, and the Medicare drug plans pay the rest. If you join a Medicare Advantage Plan or other Health Plan with drug benefits included, your drug benefit costs will be included in your health plan's monthly premiums, coinsurance, and other charges.
If you join a separate Medicare Prescription Drug Plan, you must pay drug plan costs in addition to your Medicare Part A and B costs:
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The monthly premium is the amount that you pay each month for your drug insurance coverage. Drug plan monthly premiums vary depending on the coverage the plans offer.
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The annual deductible is the amount you must pay each year for prescription drugs before your Medicare drug plan starts to pay. The annual deductible depends on the plan you choose. Medicare sets a maximum deductible each year.
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The coinsurance/copayment is the portion of your drug costs that you must pay after you have paid your deductible. Depending on the plan, you will pay a percentage of your prescription drug costs, or a flat fee per prescription. Many plans have tiers or levels of drugs, with lower fees for generic drugs than brand name drugs.
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The coverage gap or "doughnut hole" is when your prescription drug coverage stops because you have reached the benefit limit. The coverage gap starts when the amount you have paid in deductibles and coinsurance/copayments, plus the amount the plan has paid for you, reaches the benefit limit. Once your total drug costs have reached the limit, you must pay 100% of your drug costs until you reach the out-of-pocket limit. If you want drug benefits during the coverage gap, you can join a higher-priced plan with extra benefits.
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The out-of-pocket limit is the point when Medicare drug plan benefits start again after the coverage gap. Once your drug cost payments reach the out-of-pocket limit, you pay only a small copayment or coinsurance per prescription for the rest of the year.
For more Prescription Drug Plan cost information, see How much does Medicare cost?
Can I get help paying Medicare drug plan costs?
There are two ways that Massachusetts residents with Medicare can get help paying their prescription drug plan costs:
- Extra Help from Social Security
- Prescription Advantage
Extra Help from Social Security:
Extra Help is for Medicare recipients with limited income and resources. Some people qualify for full Extra Help, and some qualify for partial Extra Help, depending on income. Extra Help pays all or most of prescription drug plan monthly premiums and annual deductibles, and lowers the prescription drug copayments.
If you have Medicare, you can qualify for Extra Help if:
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you meet the Extra Help resource and income limits. See Extra Help Income and Resource Limits on the Social Security web site for current limits.
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you have MassHealth Standard (dual eligible), Medicare Buy-In (QMB, SLMB, or QI), or SSI. Medicare recipients in these categories automatically qualify for full Extra Help and do not have to file an application.
For more information about Extra Help:
Prescription Advantage:
Prescription Advantage is a Massachusetts prescription drug insurance plan that helps pay the costs of Medicare drug coverage. Prescription Advantage pays all or part of the monthly premiums and co-payments, and lowers the annual out-of-pocket costs. The amount of help you get from Prescription Advantage depends on your income.
For information about eligibility, benefits, and costs of Prescription Advantage, see:
How do I choose a Prescription Drug Plan?
There are many different Prescription Drug Plans to choose from, with different costs and benefits. When choosing a plan, you should ask:
- What are the costs for monthly premiums, deductibles, coinsurance/copayments, and the coverage gap?
- Which prescription drugs are covered?
- Does the plan use pharmacies that are convenient?
- Does the plan have a mail-order or 90-day supply option?
You should think about your current and future prescription drug needs, and how you want to pay for your drug coverage:
- If you do not use many prescription drugs now, you might want a plan with low monthly premiums and higher coinsurance
- If you want your costs spread out over the year, you might want a plan with a low deductible and higher coinsurance, so you don't have to pay so much at the beginning of the year
- If you have high prescription costs, you might want to pay extra for better coverage that includes coverage during the "coverage gap"
- If most of the drugs you use are generic, you might want a plan that charges much less for generic drugs than brand name drugs
- If you need certain prescription drugs on a long-term basis, you might want a plan with a 90-day mail-order option to lower your costs
- If you want your drug coverage included with other Medicare coverage, you might want to consider a Medicare Advantage or other Medicare Health Plan with drug benefits
- If you live in different regions during the year, you might want to choose a national plan, or a regional plan with mail-order service, so you can get your prescriptions filled wherever you are living.
There are several ways to learn about your Prescription Drug Plan choices:
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You can call Medicare at 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. A Medicare representative will answer your questions and send you printed information about the drug plans available in your area.
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You can use Medicare's online Prescription Drug Plan Finder.
With the Prescription Drug Plan Finder, you can search for the drug plans offered in your region. You can view all plans, or only the plans with the features you want. You can enter the names of the prescription drugs you use and compare plan costs for those drugs.
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You can speak to a SHINE counselor at 1-800-243-4636 (TTY:1-800-872-0166).
How do I join a plan?
If you want Medicare prescription drug coverage, you must join a Prescription Drug Plan or a Medicare Advantage plan with drug benefits. Medicare recipients who get MassHealth Standard (dual eligibles), Medicare Buy-In (QMB, SLMB, or QI), or SSI are enrolled automatically. Everyone else must choose a plan and sign up online, over the phone, or in person.
There are several ways to join a Prescription Drug Plan:
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You can call Medicare at 1-800-MEDICARE (1-800-633-4227) and enroll over the phone. TTY users should call 1-877-486-2048.
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You can enroll online on the Medicare web site: Medicare Drug Plan Enrollment Center
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You can call the drug plan you want to join and sign up directly with them. You can find drug plan phone numbers on the Medicare web site, on printed materials handed out by the drug plans, or by calling Medicare.
These are some things you should remember about joining a plan:
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When to enroll:
If you already have Medicare, you must wait for the annual Open Enrollment period to join a Prescription Drug Plan. New Medicare recipients can join a drug plan any time during their initial 7-month enrollment period. After that time, they must wait until Open Enrollment. Open Enrollment is from November 15 until December 31 each year.
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Penalties:
If you don't join a Medicare Drug Plan when you are first eligible to join, you might have to pay a penalty if you join later. The penalty is an increase in the monthly premium of at least 1% for each month you waited. You must pay this penalty for as long as you have Medicare drug benefits.
Not everyone has to pay this penalty. You do not have to pay this penalty if you have drug coverage through your employer or union that is at least as good as standard Medicare coverage. This is called creditable coverage. If your creditable coverage stops and you want to join a Medicare drug plan, you don't have to pay a penalty as long as you join within a certain amount of time.
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Coverage dates:
Your coverage begins the first day of the month after the month in which you join the drug plan. Coverage is usually for the calendar year. For people who join during Open Enrollment, coverage begins January 1.
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Switching plans:
Most Prescription Drug Plan members can only switch plans during the Open Enrollment period from November 15 to December 31 each year. There are exceptions for people in special circumstances. For example, if you move, and your plan is not available in your new area, you can switch to a different plan. People with Medicare who also get MassHealth Standard can switch Prescription Drug Plans at any time.
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