1. What is Medicare Part D?
Medicare Part D is optional, prescription drug coverage. It
helps pay for out-patient prescribed medications. Part D is sold by
private companies that are approved by Medicare.
2. Am I eligible for Part D Coverage?
If you have Medicare Part A and Medicare Part B, you are
eligible to get prescription drug coverage through an individual
policy or as part of a Medicare Advantage plan.
3. Do I need prescription drug coverage?
If you have original Medicare (Part A and Part B) or a Medicare
Advantage plan that does not include drug coverage, you should get
a Part D prescription drug coverage policy when you are first
eligible - even if you don't take a lot of medications.
Unfortunately, our health is not guaranteed. As we age, it's
likely that we will have an increased need for prescription
medications. Prescriptions are very expensive - expensive enough
that prescription drug coverage probably makes sense.
Again, don't wait. If you wait to get coverage, you will have to
pay a penalty, which results in a permanent increase in your
4. How much will I pay?
The amount you will pay for your premiums and your medications
will vary, oftentimes dramatically, from plan to plan. Here's a
look at the typical expenses you will have:
Nationally, the average Part D premium is $31.92 per month, but
varies from company to company and plan to plan. Part D
prescription drug coverage is not standardized. There are plans
that offer significantly more coverage with fewer out-of-pocket
expenses, but these plans will have a higher premium. Others will
offer less coverage for a lower premium. You choose which plan
makes sense for you.
Some Part D plans have a yearly deductible, which is currently
limited to $310.
Most plans include some form of cost-sharing through copayments
or coinsurance for each prescription you have filled. Typically,
copayments are a flat rate and coinsurance is a percentage of the
prescription's cost. You will most likely pay less for generic
drugs and significantly more for brand-name and specialty
5. What is the Donut Hole?
Most Part D plans have a coverage gap, which is referred to as
the donut hole. After you've spent a certain amount ($2,830 in
2010), you must pay all of your own drug costs until you hit the
catastrophic limit ($4,550 in 2010). Once you reach the
catastrophic limit, most plans will cover the majority of the drug
costs you incur within that calendar year. There are some plans
that offer some sort of coverage in the donut hole. However, these
plans are more expensive.
Your deductible, coinsurance and copayments count towards the
$4,550 limit, but your monthly premiums do not. In 2010, if you
have expenses in the donut hole, Medicare will send you a one-time
tax-free $250 rebate if you're not already receiving Medicare Extra
Help. In 2011, you will receive a 50 percent discount on brand name
prescription drugs once you hit the donut hole (if you're not
6. What pharmacies will I be able to use?
Typically, each prescription drug plan will have a network of
pharmacies that you will be required to use. Making sure that you
can use a pharmacy that is convenient for you is an important
consideration when you're evaluating Medicare Part D plans.
7. Will my prescriptions be covered?
Each plan has its own
, which is a list of prescription drugs it covers. You can use the
to find plans that will match the medications you are currently
Many plans will categorize drugs into tiers with a different
price points. For example, generic drugs may be categorized as Tier
1, while non-preferred brand name drugs may be considered Tier 3.
The tiers are not standardized, so a particular drug may be
considered a Tier 2 drug on one plan and Tier 3 on another plan. If
a plan you're considering uses a tier system, it's important that
you know which tier your prescriptions are in so you can
effectively evaluate your potential expenses.
Your plan could also include
. If it does, you may initially be prescribed a similar, but
cheaper medication. If that medication doesn't work effectively,
you will be "stepped up" to the more expensive drug. There may also
be quantity limits on how much medication you can receive at one
Some categories of drugs are excluded. These drugs include
prescription taken to gain or lose weight, promote fertility,
increase hair growth, or for cosmetic purposes. In-patient drugs,
Barbiturates (sleeping pills), Benzodiazepines (central nervous
system depressants), drugs for the symptomatic relief of cough and
colds, prescription vitamins and drugs (except pre-natal vitamins
and fluoride preparations) are also excluded.
8. What if I have coverage through an employer or
If you have coverage that is at least as good as or better than
Medicare's standard prescription drug coverage, it may count as
creditable prescription drug coverage
. If it does, you should be able to enroll in Medicare Part D plan
at a later date without incurring a penalty. Your best bet is to
contact your benefit administrator before you make any changes to
9. When should I join a Part D Plan?
Initial Enrollment Period
is the best time to sign-up. If you don't join when you're first
eligible, you can enroll in the Part D
Open Enrollment Period
, which is from November 15th to December 31st each year. Unless
you have had other creditable prescription drug coverage, you may
have to pay a late penalty if you fail to sign-up when you're first
eligible. This penalty is typically a permanent increase in your
10. Will I be able to switch plans?
You will be able to switch plans between November 15th and
December 31st of each year. You do not have to notify your current
drug plan that you are switching plans; your old coverage will end
when your new coverage begins.
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recommendation to buy or sell a security or to provide investment
advice unless specifically stated as such. All investments involve
risk including possible loss of principal.