What are the basic details of the 2012 Medicare Part D Program?
In general, Medicare Part D prescription drug plans provide insurance coverage for your prescription drugs - just like other types of insurance. Your Medicare prescription drug coverage can be provided by a "stand-alone" Medicare Part D plan (only prescription coverage) or a Medicare Advantage plan that includes prescription coverage (or an MA-PD that includes Medicare health and prescription drug coverage). If you join a Medicare Part D prescription drug plan, you will pay a monthly premium ranging from only a few dollars up to over 100 dollars. If you join a Medicare Advantage plan, you may have a $0 premium. Your monthly premiums will vary depending on the benefits of your selected Medicare Part D plan or Medicare Advantage plan and your resident state.
Some Medicare Part D or Medicare Advantage plans have an initial deductible where you pay 100% of your prescription costs before your Part D prescription drug coverage or benefits begin. Other Medicare Part D or Medicare Advantage plans have no initial deductible or a $0 deductible, providing you with coverage as soon as you purchase your first prescriptions. Please note, that you may pay a higher monthly premium for Medicare Part D plans with no initial deductible. Also, the amount of the initial deductible can (and probably will) change each coverage year.
Each Medicare prescription drug plan will have a list of prescription drugs or formulary that are covered by the plan. Drug lists or formularies can vary greatly from one prescription drug plan to the next. So it is key that you ensure that your medications are covered by your chosen Medicare prescription drug plan.
When you use your Medicare Part D plan after the initial deductible (if applicable), you will pay a certain part of your prescription costs and your Medicare prescription drug plan will pay a part of your drug costs. Your plan's cost-sharing (co-payments or co-insurance) will vary depending on the particular drug plan you choose.
Here is a quick summary of a Medicare Part D plan:
The CMS or Medicare defined standard benefit or model Medicare Part D plan has an annual $320 initial deductible. However, many Medicare Part D plans do not have the initial deductible (or have a $0 deductible) and provide "first dollar" drug coverage.
In the Medicare model standard plan, after the initial deductible is met the insured (for instance, you) has paid the first $320), your Medicare prescription drug plan will pay 75% of the covered prescription costs up to $2610 (the initial coverage limit $2930 minus the deductible $320) .
The insured person pays the remaining 25% ($652.5). These types of plans (that follow the CMS model plan) are using co-insurance: 25% Insured - 75% Insurer
In many/most plans, prescription drugs are arranged in "tiers" or logical groups and are assigned a fixed dollar value based on the tier. This is meant as Copayment.
After the initial coverage limit $2930 has been reached, you are in the so called "Donut Hole" or Coverage Gap. Prior to plan year 2011, the insured was 100% responsible for their medication costs in the Donut Hole unless their plan offered Gap Coverage. Beginning in plan year 2011, both the Medicare Part D plan and Brand-name drug manufacturers share a portion of your medication expenses while in the Donut Hole, in the form of a Donut Hole Discount. In plan year 2012, your Medicare Part D plan will pay 14% of your generic medication costs in the Donut Hole and the Brand-name drug manufacturer will pay 50% of your brand-name drug expenses while in the Donut Hole, even if your plan’s coverage states that it has "No Gap Coverage". In addition, some plans will provide some coverage through the Donut Hole, at an additional monthly premium.
The insured person then has a co-payment thereafter of 5%. Here the person has emerged from the Coverage Gap when there out of pocket expenses have reached $4700. They are now in what is called "Catastrophic Coverage".
Benefits may vary depending on income levels. Extra-Help programs are available based on financial need.
Premiums may increase annually. Drug lists or formularies may change with 60 days notice.
Which governmental agency is responsible for the Medicare Part D program?
The Centers for Medicare and Medicaid Services (CMS) or Medicare is responsible for the administration of the Medicare Part D prescription drug program. Private insurance carriers actually implement the various Medicare Part D plans across the country under the direction of CMS.
Where did the Medicare Part D prescription drug program come from?
Medicare Part D plans have their origin in the Medicare Prescription Drug, Improvement, and Modernization Act which was passed on December 8, 2003. This law established a voluntary drug benefit for Medicare beneficiaries and created the new Medicare Part D program. In short, the Medicare Modernization Act and the Medicare Prescription Drug Improvement feature gives Medicare beneficiaries, that is seniors and disabled citizens eligible for Medicare access to drug coverage beginning in January of 2006.
