Medicare Part D

Medicare Part D plans are the prescription drug plans designed to go with Medicare.  These plans follow a basic format dictated by Medicare.  Medicare recipients typically pay a premium ($15 to $100 depending on plan) for these plans unless the Part D portion is included with their Medicare Advantage Plan or the premium is paid for by Medicare/Social Security ("Extra Help" or Low Income Subsidy).  

Basic Structure:

Deductible:  plans may have a deductible of up to $325.

Initial Coverage:  plans set co-payments for generic, brand name, and specialty drugs.

Coverage Gap:  after you and the plan have paid a total of $2,970 since Jan 1, you begin to pay 79% for generic medications and 47.5% for brand name drugs.

Catastrophic Coverage:  after the amount you pay plus the manufactures discount equals $4,750, you pay the greater of $2.65 or 5% for generic medications and $6.60 or 5% for brand name medications.

Example 1

Mary has a plan with a $0 deductible.  She takes 4 medications which have a ful cost of $193 per month.  From January through December her total yearly drug cost will be 12 x 193 = $2,316. Mary will not reach the coverage gap and therefor will only pay the standard co-payments throughout the year.

Example 2

Robert has plan with a $325 deductible.  He will pay the deductible from his own pocket but will benefit because his plan has a very low premium and low co-payments.  Robert's typical monthly cost for medications is just $40.  He will pay the full $40 for his medications from January through August but in Sept he will have completed the deductible and will begin paying a small co-payment for his medications.  He will not reach the coverage gap phase because after the deductible, he and the plan did not pay more than $2.970.

Example 3

Paula takes some generic medications and some brand name medications.  In January, Paula pays $100 in co-payments and the insurance plan pays $230.  This will continue through September ($100 + $230 x 9 = $2,970).  for the months of October through December, Paula will pay 79% of the full cost for her generic medications and 47.5% for her brand name medications.

Example 4

Albert takes quite a few generic medications and some very expensive brand name medications.  The total cost for his medications is $3,000 per month.  He will pay co-payments in January but will be in the coverage cap phase in February.  Because the manufacturer's is discount is credited toward Albert's out of pocket costs, he will pay 79% for generic medications and 47.5% for brand names drugs during February and part of March.  When his percentage and the 50% manufacturer's discount for brand drugs totals $4,750, he will pay the greater of $2.65 or 5% for generic medications and $6.60 or 5% for brand name medications for the rest of the year.

 

Related Subjects:

Medicare Basics

Medicare Supplements

Medicare Advantage Plans