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Medicare Part D Drug Coverage Questions & Answers
- How Much Does it Cost?
- What’s Covered?
- What’s the Deductible?
- What’s the Co-Payment?
- What Is A “Donut Hole”?
- What about my Medigap Policy?
- What if I already belong to an HMO?
- What about my retiree coverage?
- Do I have to sign up now?
1. How Much Does it Cost?
Private insurance companies and HMOs will offer part D. You may have to pay a premium of about $37 per month. Some plans may offer richer benefits (smaller deductible, co-pays, or “donut hole,”) depending on the type of plan and the premium.
Plans may offer additional drugs (besides the minimum) for an additional charge. This is called the “tier” system. If your drug is not part of the basic plan, it may be offered for an extra charge in a higher cost “tier.”Finally, if your drug is not covered by your plan, you will have to pay for it yourself, and this will not count towards your co-payment and deductible requirements.
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2. What’s Covered?
Each plan has a “formulary” – a list of covered drugs. Formularies are not standardized and will vary from plan to plan. You should check to see if a plan covers your medication before enrolling.
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3. What’s the Deductible?
There is a $250 annual deductible.
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4. What’s the Co-Payment?
You are required to pay 25% of the cost for the next $2,000 in drugs (or a maximum of $500)
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5. What Is A “Donut Hole”?
Part D covers most people on Medicare by insuring drug costs up to about $2,250 a year. There is no coverage after $2,250 until your costs exceed $5,100 per year. At this point, catastrophic coverage begins: you pay only 5% of costs and Medicare pays the rest. The “donut hole” is the coverage gap between $2,250 and $5,100 where you must still pay a premium and the cost of drugs, but receive no benefits.
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6. What about my Medigap Policy?
Some Medigap policies offer drug coverage. If you have one of these policies, you will receive a letter from your insurance company this fall telling you if your current coverage is considered “at least as good as Part D coverage.” If it is not, you should enroll in a Part D plan to avoid future premium penalties. You may keep your current policy without drug coverage, or switch to a different Medigap policy that will cover your other expenses.
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7. What if I already belong to an HMO?
Medicare HMOs will replace their current drug coverage with Part D prescription drug coverage on January 1, 2006. Some HMO plans may include the Part D benefit; others may charge you for it. You will need to check with your plan.
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8. What about my retiree coverage?
If you have drug coverage through a union or company retirement plan, you will receive a letter from the plan this fall telling you how the plans benefits will change and whether you should enroll in the new Medicare prescription drug benefit.
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9. Do I have to sign up now?
If you have Medicare now, you will have until May 15, 2006 to sign up. If you decide to enroll in Part D after that date, there may be a lifetime premium penalty of 1% for each month you delayed enrollment.
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Information and Resources
1) Health Insurance Counseling and Advocacy Program (HICAP)
A network of 24 local, community-based programs throughout California that provide free counseling and education on Medicare and related issues.
To reach the program nearest you, call
1-800-434-0222
In Orange County, call
714-560-0424
2) Web Sites
www.medicare.gov
The official government website for Medicare.
www.cahealthadvocates.org
California Health Advocates, the California HICAP Association site.
www.calmedicare.org
A consumer-oriented web site sponsored by California Health Advocates that provides easy to understand information about Medicare and offers several dozen Medicare fact sheets in English, Chinese, Spanish and Vietnamese.
www.accesstobenefits.org
Offers a simple tool that will help you find a discount card or drug plan that is right for you, and other prescription assistance programs for which you may be eligible.
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