Medicare Prescription Drug Coverage (Part D)

What is Part D?
Part D is how Medicare provides prescription drug coverage to Medicare beneficiaries. Coverage is provided solely through private insurance carriers, and is available as a stand-alone prescription drug plan (PDP) or as part of a Medicare Advantage Plan.

Coverage is available for generic and name-brand drugs under a formulary. Plans are not allowed to discontinue coverage of a drug during the course of treatment. Plans must cover at least two drugs in each drug class, except for anorexia, facial hair, weight gain or loss, fertility, cosmetic drugs, cold medicine, vitamins and minerals, and over the counter drugs. Plans must cover most or all drugs for antidepressants, anticonvulsants, antipscyhotics, antiretrovirals, anticancer and immunosuppressants.

Some additional coverage may be available to Medicaid recipients through Extra Help. Denials of drugs can be appealed through the Exception Process, when initiated by a physician.

How to enroll and choose plans
Like enrolling in Medicare’s other parts, individuals have a seven month Initial Enrollment Period of three months before, the month of, and three months after the date of Medicare eligibility to enroll in a prescription drug plan.

Individuals may choose and change their prescription drug coverage annually during the Annual Enrollment Period from October 15 to December 7, with new coverage effective January 1. Beneficiaries who receive Medicaid can change plans anytime during the year, with new coverage effective the first of the following month.

When choosing plans, it is important to compare drug coverage, deductibles and co-payments as well as benefits during the coverage gap. Medicare has an online plan finder where individuals can enter their drugs, frequency, and doses to find a plan that fits them best. You can visit the plan finder here. The Colorado Division of Insurance also publishes a stand-alone guide to Medicare Prescription Drug coverage in Colorado, which is available here.

What is the Standard Benefit?
In 2015, after an individual pays the deductible of $320, the prescription drug plan pays 75% of the drug costs until the total annual cost of the drugs reaches $2,960. Then the Medicare beneficiary reaches the coverage gap (or the doughnut hole). The beneficiary is in the doughnut hole when the cost of the drugs is between $2961 and $6680. When the individual is in the coverage gap in 2015, the beneficiary is responsible for 45% of the cost for brand-name drugs and 65% for generics, with the rest being paid for by the plan. Catastrophic coverage resumes after the total cost of drugs exceeds $6680. During catastrophic coverage, the beneficiary pays 5% of drug costs, the prescription drug plan pays 15% and Medicare pays 80%.

As part of health care reform, the coverage gap is being phased out over the next decade. Starting from 2011, beneficiaries have begun receiving discounts and assistance in the coverage gap (before this there was no coverage at all in the gap). In 2015, individuals will receive a 55% discount on brand-name drugs in the coverage gap (approximately 35% on generics). This discount will be increased gradually until it reaches 75% in 2020, at which point there will be no gap in coverage between the deductible and catastrophic coverage. The individual will be responsible for 25% of the prescription drug costs in the doughnut hole.

What is the Late Enrollment Penalty?
Designed to encourage maximum participation in Part D, the Late Enrollment Penalty is an increase in premiums for those who do not sign up for Part D immediately when eligible. Individuals without creditable coverage (meaning prescription drug coverage from another insurer, such as an employer, that is equivalent or superior to Part D) after 63 days from the end of the Initial Enrollment Period, will face the Late Enrollment Penalty. If such individuals should later sign up for Part D coverage, they will pay 1% in addition to the applicable premium for every full month they were not covered.

Individuals who are unable to meet the Part D co-payments may be eligible for Extra Help, a program that is administered through Medicaid to help pay for drugs; they may also be eligible for Medicare Savings Program to pay for Part A and B deductibles, premiums and co-pays.

To talk with a counselor about prescription drug coverage, including assistance with selecting a plan, enrollment questions or questions on Extra Help, call 303-333-3482.