Effective January 1, 2006, Medicare introduced a voluntary Prescription Drug Program. This program was established under the Medicare Modernization Act of 2003 with the intent of lessening the financial burden of prescription drug costs for beneficiaries, especially for those with low incomes and with extremely high out-of-pocket expenses.

 

Under the law, Medicare Part D will pay for outpatient drug coverage through Medicare-approved private drug plans, giving beneficiaries access to a standard drug benefit or its equivalent.  Medicare has defined the minimum requirements for standard coverage.

 

While plans may vary, in general they will have a monthly premium based on the plan that  an individual chooses and include deductibles and co-pays.  Under the standard plan, once an individual meets the annual deductible ($265 in 2007), Medicare will pay 75% of the drug costs.  The individual will be responsible for 25% up to a certain limit in total drug costs, which in 2007 is $2,400.  Once this limit in total drug costs is met, there is a gap in coverage, often referred to as the donut hole, in which Medicare does not pay any of the costs until the individual reaches a certain total out-of-pocket expenditure ($3,850 in 2007), which includes his or her deductible and earlier 25% co-payments.  Once the individual reaches the annual out-of-pocket limit, the coverage gap ends and what is called catastrophic coverage comes into play.  For the remainder of the year, the individual will pay a small co-insurance (e.g., 5% of the drug cost) or small co-payment ($2.15 or $5.35 in 2007) for each prescription for the remainder of the year.  The above costs do not include the monthly premium for the coverage.  Assistance with the costs of the Medicare Prescription Drug Program is available to certain individuals with limited income and assets.  For those who qualify, assistance can be provided for covering the monthly premium, yearly deductible, and prescription co-payments.  Related information can be found on the Medicare website or obtained by calling Medicare (See Resources to Get You Started.)

 

There are multiple prescription drug plans available to Medicare beneficiaries.  If your loved one is considering a plan, check to see that his or her current medications are covered under any plan you are considering.  The Medicare plans will cover both generic and brand-name drugs, but plans may have different rules about which drugs are covered in different categories.  Most plans will have a formulary that lists the drugs covered under the plan. The list must meet Medicare’s requirements, but it can change over time.  A company is required to inform the beneficiary at least 60 days before discontinuing or changing its costs on any drug the person may be using.  If a beneficiary’s doctor feels that a drug not included in the list is needed, or if a drug an individual is taking is being removed from the list and is needed, the beneficiary or doctor can apply for an exception or appeal the decision.

 

The Medicare website contains local and state specific information on available Medicare Prescription Drug Plans, a plan comparison capability based on an individual’s Medicare number and demographic information, a formulary finder to allow individuals to search formularies in their state in relation to medications they are currently taking, and a section related to how to lower costs during the coverage gap.  Utilize the Medicare website; call Medicare if you have questions; and consider speaking with your loved one’s pharmacist, who will likely be familiar with the available plans.  There are multiple options from which to choose, and it may seem overwhelming at first, but there are resources that can help through Medicare and at the state and local level.  See Resources to Get You Started.