Medicare Part D - Are The 2009 Increases A Good Deal For You?

WHAT IS MEDICARE PART D? - A basic introduction to Medicare Part D Prescription Medicine Coverage

First in a series of basic Medicare information, I started sort of at the end with Medicare Part D because more people were asking for information about it than parts A, B or C.

The Medicare Part D program provides beneficiaries with assistance in paying for prescription medicine. The drug benefit expanded Medicare through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, (MMA) which began in January 2006. Different than coverage in Medicare Parts A and B, Part D coverage is not provided within the traditional Medicare program. Rather, beneficiaries must seek out and enroll in one of many hundreds of Medicare Part D programs offered by private companies.

The Annual Enrollment Period for Medicare Part D is between November 15 – December 31. During this time period folks on Medicare can enroll in a program or change their enrollment from one plan to another. Individuals  already in a plan should determine whether it will be good for them in the coming year; if they don’t select to change over they’ll stay in their current plan.

All programs will have different prices and benefits from year to year, so it is advisable for all beneficiaries to study their alternatives and make the most beneficial choice they can for the coming year.  Although coverage does not start until January each year, programs can advertise starting in October and beneficiaries can start making plan selections on November 15th.

The Standard Drug Benefit

The Medicare law sets up a standard Medicare Part D drug benefit. Programs must provide a benefit package that is at least as useful as the standard benefit. The standard benefit is outlined in terms of the benefit structure, not the specific drugs that must be covered. In 2009.  This standard benefit includes an initial $295 deductible. After satisfying the deductible, you pay 25% of the next $2,405 (25% of $2,405 = $601.25) of covered Part D prescription medicine. 

When the initial coverage limit is reached, beneficiaries are subject to an additional deductible, called the “Donut Hole,” or “Coverage Gap” in which they must pay the total costs of drugs.  The Donut hole “threshold” is equal to $2,700. Then you pay 100% of the next $3,453.75.  When your total out-of-pocket expenses  reach $4350 ($295 + $601.25 + $3,453.75 = $4,350) - including the costs of the deductible and coinsurance - beneficiaries arrive at the “Catastrophic Coverage ” benefit. 

Beneficiaries entitled to Catastrophic Coverage pay $2.40 for a generic or favored drug and $6.00 for other drugs, or a flat 5% coinsurance, whichever is larger.  Note that this out-of-pocket sum of money is calculated yearly. Beneficiaries who get to the $4,350 out-of-pocket threshold in one year must begin all over again on January 1st of the next year.

Since the deductible, initial coverage limit, and annual out-of-pocket threshold vary each year according to the changes in outlays for Medicare Part D drugs, beneficiary out-of-pocket expensess may increase yearly. The Medicare law does not require a set premium amount. These costs, as well as the list of covered drugs, change from plan to plan and from area to area.  Beneficiaries had better take time to go over the various plans available to them in view of their present and expected needs and ability to pay.  Don’t wait too long to decide on the best Medicare Part D because enrollment or plan switching ends December 31st.

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