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Medicare Drug Plans

Medicare Drug Plans

Medicare’s prescription drug program started from the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA). The act was written into law in 2003 and was implemented January 1, 2006. It is commonly referred to as PDP (Prescription Drug Plan) or simply Part D.

PDP is available to anyone with Medicare regardless of health or income history. You simply select a plan from those available in your state and pay the insurer a monthly premium for the coverage.

Stand along prescription drug plans are known as Part D or PDP plans. These plans were designed for people who chose to use Original Medicare and add prescription drug coverage with or without a Medicare Supplement to round out their coverage. These plans do vary in deductibles, monthly premiums, formularies, copays and other cost sharing arrangements.

You may also choose to receive your Part D benefits by using a Medicare Advantage Plan. These plans are available through private insurers and include HMO, PPO, and Special Needs Plans.

Enrolling in a Part D prescription drug plan

One simply needs to be Medicare beneficiary to enroll in a PDP.  The best time to enroll is upon eligibility as waiting can trigger a late enrollment penalty.  This penalty has been designed to try to eliminate people enrolling only when they need medication.  What the government is trying to avoid is "adverse selection" where healthy people avoid the small expense.  This penalty adds about $45 per year to the cost of any plan for each year that has passed without enrolling.  We can help you find a low-cost plan simply to avoid the penalty

The Late Enrollment Penalty

If you do not sign up for a Medicare prescription drug plan when first eligible, you may be charged penalty for late enrollment. The penalty is based on the number of months that have gone by since you were first eligible to enroll and when you finally do enroll.

You will be levied a penalty of 1% per month and that penalty will last for as long as you remain enrolled in a plan. You will be charged based on the average cost of a plan in that year that you finally enroll. For instance, if 20 months have elapsed before you finally enroll and the average cost for a plan in that year is $30, the cost of your plan would be $45-(1.5 times $30). This penalty would be assessed each year for as long as you remain enrolled in a plan.

The "dreaded" Donut Hole

The standard PDP will have a “coverage gap” also known as the “Donut Hole”. This gap starts after you and your drug plan have reached a limit which varies each year for medication received. Generally, plans will allow you to fill medication for copays until the gap. Once you have reached the coverage gap which is based upon the total cost of prescriptions you will then receive a discount on both brand name and generic medications.  The donut hole is going away within the next few years.

Once you have spent a specified amount (varies each year) you exit the gap and enter the catastrophic benefit where you pay no more than 5% of the cost of medication.  Unlike the value of medication that gets you into the gap, it is what you spend that moves you out and into the catastrophic level.

Some people are able to avoid all the “levels” based upon income.  Lower income individuals receive subsidies to avoid much of the medication costs. We can help you with this and other options that can save you thousands of dollars!

It’s important to review your coverage each year. There are other ways to save money on your medications. Let us review your options. We’re here to help.

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