Prescription drug coverage is available to every senior covered by Medicare insurance. Enacted in 2006, coverage is provided by either an insurance company or other private entity approved by Medicare. Every plan is different in both coverage and cost. Individuals with incomes below a particular threshold are eligible for assistance with premiums and drug costs. Additionally the Affordable Care Act (ACA) has provisions that eliminate the “doughnut hole” currently in place. Enrollment in Part D is done at the same time seniors enroll in Parts A and B. Failure to enroll in Part D in a timely manner can cause you to incur a penalty later.
Do I Need to Enroll?
There are three factors to consider when deciding if you need Medicare’s drug coverage.
- Do you currently have coverage?
- Your monthly income
- How much do you spend on prescriptions?
Medicare’s basic drug benefit uses the term “creditable” when looking at other plans. Creditable plans have benefits that are at least as good as or better than Medicare’s basic drug benefit (www.medicareinteractive.org). If you currently have coverage through your employer or insurance company, they will send a letter each year advising of the plan’s status as creditable. If the coverage is not creditable, you can enroll in Part D coverage without a penalty.
If you have coverage outside of Medicare, always be sure that taking Medicare coverage will not negate your benefits under your private plan. Some plans are not compatible with Part D. Joining a Part D plan can cause you to lose your benefits and not be able to get it back (www.medicareinteractive.org).
Taking a look at your current prescriptions and their costs and comparing them to the benefits offered under other plans can also be helpful. Be sure to compare both the drug and the dosage since these vary by plan and include the premium when comparing.
Paying the Premium
Most plans charge a monthly fee which varies by coverage. This is in addition to your Part B premium. Those covered by a Medicare Advantage Plan, or Part C, may have coverage in that plan (www.medicare.gov).
Individuals with a monthly income of $1,459 or less , or couples with less than $1,967, in 2014 may qualify for “Extra Help.” This program provides assistance to people with limited income and offers significant savings to those who qualify (www.aarp.org).
Individuals on Medicaid and reside in a skilled nursing facility or are receiving Supplemental Security Income automatically qualify for Extra Care. Other individuals can apply for assistance and receive some assistance in the form of fixed copays for both generic and brand name prescriptions. In the event you do not qualify for Extra Help you may qualify for aid under your state health insurance assistance program (SHIP) or you can apply for regular Medicare Part D coverage.
The Doughnut Hole
The biggest downside to Part D coverage is the gap in coverage commonly called the “doughnut hole.” This “hole” is the gap between initial payments under Part D and when benefits resume. During this gap, participants are responsible for paying 100 percent of their prescription drug costs.
Individuals receiving Extra Care or SHIP assistance or have another plan that covers the gap do not have to worry about these additional expenses. Additionally, if your drug costs will not exceed $2,850 in 2014 you will not have a gap in coverage. This dollar amount is adjusted annually for inflation and will be reduced by the year 2020 under the Affordable Care Act (ACA).
If you fall into the doughnut hole, you are responsible for 47.5 percent of the costs of brand name drugs and 72 percent of the costs for generic drugs. By 2020, participants will pay no more than 25 percent of any costs. The rest of the costs of brand name drugs are subsidized by the drug companies and generics are subsidized by the federal government.
Once your prescription costs reach $4,550 in 2014, the amount falls under catastrophic coverage and the Part D policy covers 95 percent of your prescriptions through the end of the year.
Choosing a Plan
This can be the most confusing part of the process and it is important to make the right choice since the plan you choose is the one you will be staying with for the entire calendar year (www.aarp.org). It is also wise to review plans each year since your needs may change from year to year.
To make an informed decision, there are a few things to consider.
- The first step to take is to write down every prescription you take, the dosage and its cost. It’s the specific drug that determines the out of pocket cost under the plan (www.aarp.org) and these costs vary widely. There is a tool on the Medicare website that allows you to enter your zip code and the prescription data. The results will provide you with a list of plans with your probable out of pocket costs and which drugs will be covered. The list will also show the pharmacies in the network.
- Companies that provide Part D coverage change their plans every year. These changes can affect the premium, out of pocket costs, copays and the drugs covered. Some plans offer doughnut hole coverage for a plan year then remove it the next. The insurer is required to provide an “Annual Notice of Change” outlining the changes to your plan by September 30 to provide you adequate time to look for a new plan.
- There is always the chance that you may not find a plan that covers all of your prescriptions, particularly those that are new or extremely expensive. Speak to your doctor to find out if there are any alternatives that can work for you. If not, your doctor can request an exception in writing to appeal the denial. Companies may make an exception for specific medical conditions.
Deciding to take Part D coverage is voluntary. In order to make the best decision, you need to take into consideration your health, prescriptions, income and budgetary requirements. Low income should not be a deterrent. There are programs in place on both the state and federal level to assist seniors in paying for Part D coverage. It can be a time consuming process, but Part D coverage is a significant benefit that helps seniors to maintain their health and lead a healthier life.