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Overview of Medicare Part D

Medicare Part D, which came into effect on January 1, 2006, is a federal program that subsidizes the costs of prescription drugs for Medicare beneficiaries in the United States.  It was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).

Everyone who qualifies for Medicare benefits are also eligible for the benefits bestowed under Medicare Part D.  The intention of this program is to protect individuals from today’s high cost of prescription drugs as well as future costs.  Medicare Part D offers added coverage for prescription medicines. Medicare works with insurance companies to offer this benefit and the benefit is available irrespective of a person’s income, illnesses, or drug costs.

Because private companies are setting up the plans for Medicare, each plan will be a bit different from the other.  Some may use only certain pharmacies and others may cover only certain drugs.  The cost also may vary.  Therefore, it is important for beneficiaries to pick a plan that best meets his/her needs.

The Annual Election Period for Part D commences from November 15 – December 31.  During this period, people with Medicare can enroll in a plan or change their enrollment from one plan to another.  Therefore, individuals already in a plan should decide whether it will be right for them in the coming year.  If they do not choose to switch they will remain in their current plan.  Since all plans have different costs and benefits from year to year, it is best that all beneficiaries consider their options and make the best choice they can for the coming year.

Cost under Part D will vary depending on which plan a person chooses.  The scheme of the plans vary depending on the drugs used as well as whether the person has help for paying his/her Medicare Part D costs.  Most Part D drug plans charge a monthly premium as well as a small co-pay for each drug.  Some people qualify for extra help paying their costs.  A person who qualifies for extra help can contact the Social Security Administration to apply for this benefit.
A person who does not qualify for extra help may have a “coverage gap” or a “donut hole.”  This coverage gap is a period of time in which a person will have to pay for all the prescription drug costs.  The coverage gap begins once the person has under his/her plan spent a certain amount on prescription drugs.  After that, the person will continue to pay the monthly premium and will pay for a certain fixed amount of the drug costs out-of-pocket.  Once a person reaches the coverage gap limit, he/she will have “catastrophic coverage” by which the person only pays a small amount for each of his/her drugs for the rest of the year.

Prescription drug coverage under Part D is voluntary.  A beneficiary may purchase Part D coverage if she is entitled to Part A or enrolled under Part B.  The beneficiary does not have to have both Part A and Part B coverage to choose prescription drug coverage.  The beneficiary must enroll in a Part D plan that serves the geographic region in which she resides.  Beneficiaries who are incarcerated are not eligible to participate in Part D.  Also, like other insurance, if a participant does not opt to enroll in a Part D drug plan when they first become eligible, they may wind up paying more for coverage later on.

Inside Overview of Medicare Part D