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Medicare Prescription Drug Plans: All about Medicare Part D

Industry News | Jan 14, 2016

If you are eligible for original Medicare, then you are also eligible to receive Medicare's prescription drug coverage, known as Medicare Part D. Having the right drug coverage can save you a substantial amount of money, and it is important to understand everything Part D has to offer.

How does Medicare Part D work?
Beneficiaries enroll in Medicare Part D using private insurance companies that are contracted by Medicare, explained eHealth. As a result, the out-of-pocket costs and drugs covered are extremely diverse depending on which company you choose. While private insurance companies have a substantial amount of power when it comes to determining what their Part D plans cover, Medicare has a list of categories for which coverage must be provided. It is required Part D plans cover at least two kinds of drugs in each category. As long as those conditions are met, insurance companies can choose which drugs to cover.

"Out-of-pocket costs and drugs covered vary depending on which insurance company you choose."

Medicare.gov explained enrolling in Medicare Part D will add drug coverage to certain Medicare Cost Plans, certain Medicare Private Fee-for-Service Plans, Medical Savings Account Plans and all original Medicare Plans. If you have a Medicare Advantage Plan (Medicare Part C), Part D is probably already included in your plan. Something to keep in mind: If Part D is included under your Medicare Advantage Plan and you also enroll in Part D separately, you will automatically lose your Medicare Advantage plan and be re-enrolled in original Medicare.

The Kaiser Family Foundation explained that not only will each Part D plan vary in the specific drugs it covers, but the price of premiums and deductibles can also be incredibly diverse. eHealth added many plans require beneficiaries to pay a separate monthly premium for Part D, in addition to the premium they pay for Part B. Co-pays and coinsurance also vary, and there are some plans that may not even require an annual deductible.

Other potential costs you will have to cover on your own could come from reaching a coverage gap, explained eHealth. This happens when a specific amount of money has already been spent on your medications. After the amount is reached, you might have to begin paying the full price for your medicine. The out-of-pocket payments, however, are temporary. Once you spend enough, you enter catastrophic coverage and return to paying a minor coinsurance or copayment.

There is also a Part D plan for low income families. According to the Kaiser Family Foundation, Medicare will provide cost sharing assistance for those with low incomes and a lack of substantial assets.

How do I enroll in Medicare Part D?
There are a few different ways to enroll in Medicare Part D, but try to avoid paying any late enrollment costs. To do so, make sure to enroll in Part D when you first become eligible. There are specific open enrollment periods during which you can do so.

"Try to avoid paying any late enrollment costs."

Medicare.gov provides a Medicare Plan Finder that can help you find the best Medicare Part D plan for you. To find more information on Medicare Part D plans, you can also speak to your current health insurance provider, fill out a paper enrollment form or call 1-800-Medicare.

What will Part D look like in 2016?
The Kaiser Family Foundation reported 2016 will see 886 prescription drug plans offered by Medicare. While this number is the lowest it has been since Part D became available in 2006, beneficiaries will still have many options, no matter the state in which they live and no matter if they plan to enroll in Part D separately or include it in their Medicare Advantage Plans. There will also be 226 plans available to support low income households. Sixty-seven percent of prescription drug plans will include a deductible in 2016 and 53 percent will charge the standard amount of $360.