Medicare Part D Prescription Drug Coverage

Medicare Part D Prescription Drug Coverage

Presented by Jared Daniel of Wealth Guardian Group

What is Medicare Part D prescription drug coverage?

The Medicare program, which is a federal program that helps senior citizens and certain other individuals pay for health care, is divided into four parts. Part A covers hospital and inpatient services and Part B covers doctor visits and other outpatient services. Together, Parts A and B are referred to as original Medicare. Part C, also known as Medicare Advantage, makes Medicare-covered services available through private health plans, such as HMOs, PPOs, and private fee for service plans (PFFSs). Part D prescription drug coverage is offered by private companies through stand-alone plans (for members who have original Medicare) and through HMOs, PPOs, and PFFSs (for beneficiaries who have Medicare Advantage). Anyone who has original Medicare or Medicare Advantage is eligible to enroll in Part D. Enrollment in Part D is voluntary.

Tip:     You may already have prescription drug coverage through your Medicare Advantage plan, private health insurance such as Medigap, or your employer or former employer's health plan. You can generally opt either to keep that coverage or join a Medicare prescription drug plan instead.

What is covered under Part D?

In general

Private companies that offer Part D coverage are allowed to design their own benefit plans, as long as the overall value of the plan is at least as good as the basic plan outlined in the 2003 Medicare Act. So, different plans offer different lists of medicines (called a formulary), and different costs. Beneficiaries should compare the different drug plans available in their area to find the one that best suits their needs.

Tip:     The Medicare website provides an online tool to help you compare drug plans.

The basic plan

The basic plan generally meets the following criteria:

·         The annual deductible can't be more than $310 (in 2014)

·         The plan must cover at least two drugs in each drug class

·         The plan must cover substantially all drugs in these six categories: antidepressants, antipsychotics, anticonvulsants, antiretrovirals (AIDS treatments), anticancer drugs, and immunosuppressants

·         Members must be able to seek an exception if a drug is medically necessary but not covered under the plan

·         Plans must have a network of pharmacies that provide convenient access

·         Lists of covered drugs and pharmacy networks must be readily available to members

·         Plans must work with nursing homes

·         Plans must help transition a member's current drug coverage

·         Plans must offer catastrophic coverage that is at least as good as the coverage outlined in the 2003 Medicare Act

What is not covered

Some drugs are generally not covered by Medicare Part D, including:

·         Over-the-counter drugs

·         Most prescription vitamins and minerals

·         Certain anti-anxiety and anti-seizure drugs

·         Fertility drugs

·         Drugs for weight loss or gain, and anorexia

·         Cosmetic and hair growth drugs

·         Drugs that treat symptoms of the common cold (e.g., coughs, congestion)

·         Drugs covered under Part A or Part B

Tip:     For information on Medicare Part D rights and protections, go to www.medicarerights.org.

How much does it cost?

How much you'll pay for Medicare drug coverage depends on which plan you choose. But in general, here's what you can expect to pay in 2014:

·         Monthly premium: Most plans charge a monthly premium. Premiums vary, but average $31. (Source: Centers for Medicare and Medicaid Services.) This is in addition to the premium you pay for Medicare Part B. You can have the premium deducted from your Social Security check, or you can pay your Medicare drug plan company directly. Note that beneficiaries with high incomes will be required to pay a higher Part D premium than other beneficiaries.

·         Annual deductible: Most plans require you to satisfy an annual deductible of up to $310.

·         Co-payments: Once you've satisfied the annual deductible, if any, you'll need to pay 25 percent of the next $2,540 of your prescription costs (i.e., up to $635 out-of-pocket) and Medicare will pay 75 percent (i.e., up to $1,905). After that, there's a coverage gap; you'll need to pay 100 percent of your prescription costs until you've spent an additional $3,605 (some plans offer coverage for this gap). However, once your prescription costs total $6,455 (i.e., your out-of-pocket costs equal $4,550--you've paid a $310 deductible + $635 + $3,605 in drug costs, and Medicare has paid $1,905), your Medicare drug plan will generally cover 95 percent of any further prescription costs. For the rest of the year, you'll pay either a coinsurance amount (e.g., five percent of the prescription cost) or a small co-payment for each prescription.

Caution:         Costs and limits may change each year, and not all plans will work exactly this way.

Caution:         Health-care legislation passed in 2010 gradually closes the prescription drug coverage gap. In 2014, if you have spending in the coverage gap, you'll receive a 52.5 percent discount on brand-name drugs, and a 28 percent discount on generic drugs. Other changes will take effect in future years.

Tip:     Extra help with Medicare drug plan costs is available to people who have limited income and resources. Medicare will pay all or most of the drug plan costs of seniors who qualify for help. You can get an application for help from Medicare, or you can pick up one up at your local pharmacy.

Enrolling in Part D

Medicare prescription drug coverage is available in two ways:

·         You can join or remain in a Medicare Advantage plan that provides all your Medicare benefits, including Part D benefits

·         You can enroll in a stand-alone plan, which will cover only Part D while you continue to get your other services through original Medicare

Caution:         If you are in an HMO or PPO, you must receive drug coverage through that plan.

If you are currently enrolled in Medicare, you can enroll in Part D (or make changes in your Part D coverage) from October 15 though December 7 of each year (the annual election period). If you're new to Medicare, you have seven months to enroll in a drug plan (three months before, the month of, and three months after becoming eligible for Medicare). If you qualify for special (extra) help, you can enroll in a drug plan at anytime during the year.

If the initial enrollment period is missed, you will be able to enroll (or disenroll, or change drug plans) during the annual election period. However, a premium penalty will generally apply unless the reason you didn't join sooner was because you already had prescription drug coverage that was at least as good as the coverage available through Medicare.

Caution:         You will be unable to enroll, disenroll, or change drug plans during the annual Medicare open enrollment period (OEP), which is January through March each year.

You can join or change plans during a special enrollment period (SEP) in certain situations, including (but not limited to):

·         Moving out of your plan's service area

·         Losing drug coverage provided by a non-employer through no fault of your own

·         Losing employer-provided drug coverage for any reason

·         Losing full Medicaid coverage

·         Entering, residing in, or leaving a long-term care facility

Tip:     Medicare beneficiaries can switch to a 5-star Medicare prescription drug plan during a Special Enrollment Period that runs from December 8, 2013 through November 30, 2014 if one is available in their area (limited to one plan change per year). A 5-star plan is one that has been rated as excellent by Medicare. Beneficiaries whose Medicare Part D drug plan fails for three straight years to achieve at least a 3-star quality rating will also be offered a special enrollment period that will allow them to move to a higher-rated plan.

Jared Daniel may be reached at www.WealthGuardianGroup.com or our Facebook page.

IMPORTANT DISCLOSURESBroadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials.  The information in these materials may change at any time and without notice.