Figuring Out Medicare Part D
Vincci Ma, PharmD Candidate 2007
Univ. of North Carolina, Chapel Hill, School of Pharmacy
Prepared during Consumer Health Information Corporation Clerkship
E ver since Medicare Part D was introduced in 2005, all you hear is, “If you are eligible, go sign up!” But like many people, you find that signing up is not an easy process.
- When you try to sign up, you find that although there is enough information, the information is too confusing.
- You get on the Medicare website, but you do not know where to start.
- You call Medicare, but you get discouraged from waiting a long time to speak to representative.
However, it is important that you take the time to learn about Medicare Part D. This article tells you what you need to know about Medicare Part D. By knowing what Medicare Part D has to offer, you can find a plan that best fits your healthcare needs. But nothing can replace the benefits of having a family pharmacist. Your pharmacist is your best tool when finding a prescription plan that works for you!
What is Medicare Part D?
Medicare Part D was started by the government to help you pay for your prescription drugs. It is offered by private insurance companies, so there are many prescription drug plans to choose from. In 2007, North Carolina alone will offer 51 prescription drug plans. The plans vary in their costs and in how they pay for your drugs. Therefore, you need to know how to compare your options and find a plan that is best for you.
Why do I need Medicare Part D?
- Medicare Part D can protect you and your family against high and unexpected drug costs.
- As we get older, we may need to take more drugs to maintain our health. As a result, our drug costs can increase substantially.
- A sudden illness can lead to high drug costs that are impossible to predict.
Who can sign up?
You can sign up for Medicare Part D if you are:
- Age 65 or older
- Under age 65 with certain disabilities
- Any age with End-Stage Renal Disease
When do I sign up?
You should sign up during the enrollment period, which is between November 15th and December 31st of each year. After you sign up, Medicare Part D will start paying for your medications by January 1 of the following year. You can join 3 months before you turn 65. So if your birthday is between November 15, 2006 and February 15, 2007, you should join by December 2006.
Late enrollment penalty
You may have to pay a penalty if you enroll late. If you do not sign up during the enrollment period that you are first eligible, your monthly premium may be increased by one percent each month you are late. If you turned 65 before or during January 2006 and you still do not do have any form of drug coverage, you should sign up for Medicare Part D right away. If you do not sign up, you will end up having to pay a higher premium. The longer you wait, the more expensive your premium will get.
How does Medicare Part D work?
There are two ways to get Medicare prescription drug coverage. You can join Medicare Part D or you can join a Medicare Advantage Plan that offers drug coverage. Whatever plan you choose, Medicare drug coverage can help you pay for brand-name and generic drugs at pharmacies that are convenient for you.
Costs will vary depending on the drug plan you choose. Below are few examples of costs you may have with your prescription drug plan.
- Monthly Premium: fixed monthly cost you must pay regardless of the amount of money you spend on your drugs.
- Yearly Deductible: a fixed amount of money that you must pay every year before your Medicare coverage will begin. For example, if your plan has a $250 deductible, you will have to pay for your drugs in full until you have spent $250. Once your drug costs have reached $250, your Medicare coverage will start.
- Copay or coinsurance: after your total drug costs go above the deductible, you pay a discounted cost for your drugs.
- Copay is a set amount that you pay for a drug. Insurance covers the rest. Drugs are divided into groups called tiers. A drug that belongs to a higher tier has a higher copay than a drug in a lower tier. For example, a $20 copay for a tier 2 drug means that no matter how expensive the drug originally costs, you only pay $20 for that drug. If the drug itself costs less than $20, you pay the lower cost.
- Coinsurance is a set percentage that you have to pay for a drug. Insurance covers the rest. For example, a 20% coinsurance means that you pay 20% for a drug and the insurance pays the remaining 80%. The higher the cost of the drug, the higher the amount you will have to pay for the drug.
To better help you picture how your drug plan may work, here is an example. You find a plan that offers:
- Monthly premium of $25 ($300 per year)
- Yearly deductible of $250
- Coinsurance of 20% up to $2,250
- No gap coverage
- Catastrophic coverage of 2% once drug costs go above $5,100
Suppose your total drug costs for the year reach $6,000, here’s how much you pay in each coverage period with Medicare Part D compared to your full drug costs without Medicare Part D: