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What is Medicare Part D?

Senior woman sitting outsideStarting January 1, 2006, Medicare will provide insurance coverage for prescription drugs through a program called Medicare Part D. Insurance companies and other private companies will work with Medicare to provide a choice of plans that cover both brand name and generic brands. If you are currently enrolled in Medicare Parts A and/or B you qualify for the new Medicare Prescription Drug Coverage.

Medicare, on average, will pay approximately 75% of the total monthly premium for this insurance coverage. You will be responsible for monthly premium which may range from $30-$40. Medicare Part D will also provide peace of mind because it protects you if your drug spending is more than $3,600 in a year. Even if you don't use a lot of prescription drugs now, you should consider joining.

The initial sign-up period begins November 15, 2005 and ends May 15, 2006.

Medicare Part D Spending Phases
Phase 1

 

 Calendar Year Deductible

 

 $250.00
(Providers may opt to waive the deductible)
Phase 2 Initial Coverage Limit $2,250.00
A co-payment is paid for the first $2,250.00 of prescription drugs each year. The entire amount spent on prescription drugs (co-pay, plus what the plan pays) counts toward this initial coverage limit of $2,250.00. The premium for the Part D plan does not count toward this limit.

(Plans may have differing formularies and co-pays).
Phase 3 Coverage Gap (Doughnut Hole) $2,250.00 to $3,600.00 of true out of pocket costs (TrOOP).

No prescription coverage paid in the Coverage Gap.

Only member co-payments made during the initial coverage limit count toward TrOOP-not the benefits paid by the plan.

Phase 4

 Catastrophic Coverage TrOOP exceeding $3,600.00 have co-pays of $2.00 for generic or brand drugs that is a multi-source drug and $5.00 for all other drugs, or a 5% coinsurance and the Plan pays 100% of the balance.