Part D and How It Works
The Medicare Modernization Act of 2003 established a voluntary drug benefit for people on Medicare know as Part D, which went into effect in 2006. Everyone on Medicare has access to these Medicare drug plans through private plans approved by the federal government. Beneficiaries with low incomes can be eligible for assistance with their Part D plan through premiums and cost sharing. The Affordable Care Act of 2010 made several changes to Part D; one of the biggest was phasing out the coverage gap by 2020.
There are a couple of ways to receive the benefit of Medicare Part D. The first – you can purchase from a private company, a standalone PDP. When you purchase a standalone, it has no tie to your current health coverage. Another way you can receive a drug plan is through purchase of a Medicare Advantage plan that has a prescription drug benefit. In 2015, over 1000 PDPs will be offered across the 34 PDP regions nationwide.
Part D enrollment is voluntary except for those who are dually eligible (have both Medicare and Medicaid) and other certain low income benificaries who will be automatically enrolled in a PDP if they do not choose one on their own. If a Medicare beneficiary does not purchase a PDP and does not have creditable coverage (coverage that is as good as standard Part D coverage) they face a penalty equal to 1% of the national average premium, for each month they delay enrollment.
When it comes to benefits and premiums there is some math involved and it can be tricky for some. The standard benefit for 2015 has a $320 deductible and 25% coinsurance up to an initial coverage limit of $2,960 in total drug cost (that’s what you and your plan pay towards your drugs). This is followed by the coverage gap, or as some know it, the “Donut Hole.” During the time you are in the coverage gap you become responsible for a great portion of your drug costs. For example, you will pay 45% of the cost for your brand name drugs, and 65% for generic drugs, until the beneficiary’s out of pocket spending reaches $4,700. Under some drug plans when the enrollee reaches the coverage gap, the plan will still cover certain medications. After that point, you reach what is called “Catastrophic Coverage” where enrollees pay either 5% of the total drug costs or $2.65/$6.60 for each generic or brand name drug.
Senior Financial Group can help you with all of your Medicare insurance needs including your Part D plan. With over 30 years of experience, we believe that it is our job to help Medicare Beneficiaries understand all of their options. We provide expert, unbiased assistance to Medicare recipients who expect, and deserve, the highest-quality insurance at the best price. We offer a wide range of solutions for varying lifestyles and budgets.
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