Your Guide to Medicare Part D

Choose the Plan That Meets Your Needs

Depending on where you live, there may be more than 50 Part D plans in your area from which to select. You can choose your prescription drug coverage by cost, by which drugs are covered and how much is covered, or by convenience.

You can find a list of the Medicare prescription drug plans by state and Medicare Advantage Plans with drug coverage by county using the Medicare Prescription Drug Plan Finder at www.medicare.gov, or call 800-MEDICARE. The Medical Prescription Drug Plan Finder tool can help you determine which plan best meets your needs based on your personal criteria.

The Medicare Prescription Drug Plan Finder also can help you if you are not sure whether you qualify for financial assistance, if you have Medicare coverage continuation with a Medicare subsidy through your employer or union, or if you are already subscribed to a Medicare Advantage Health Plan or Medicare drug plan.

Costs to consider include your premiums, your deductible, and your share of the costs of your medications, which vary from one plan to another.

Look for the plan with the lowest premiums and deductible and the lowest overall costs for the medications you take. If you take a lot of medications, consider a plan that covers the donut hole. (Note: You may have to reevaluate plans if your present medications change, your dosage changes, or your doctor adds new drugs to those you already take.)

Coverage considerations include which drugs are covered, rules (such as having to obtain prior authorization before purchasing a drug), and what is commonly known as the ”donut hole.”  Part D plans cover some but not all medically necessary drugs on the market today. This means that certain plans may pay for some but not all of the drugs you take. All plans identify which drugs they cover on a list of drugs that is referred to as a ”formulary.” You can view the formularies of the Part D plans in your state online.

Convenience considerations include which pharmacies participate in the plan (an important consideration if you have a favorite pharmacist, or one who is conveniently located, or open around the clock) or whether the plan offers mail-order prescriptions, especially if transportation to a pharmacy is difficult to obtain or expensive for you. Determine whether your favorite pharmacy participates in a particular plan or if the plan offers mail-order delivery of your medications.

You can check plan coverage and other features using the Medicare Prescription Drug Plan Finder online. AARP has published a guide to using the Medicare Prescription Drug Plan Finder. It is also available by calling 1-888-687-2277. To ensure that the drugs you take are covered, make a list of the drugs and dosages and number of dosages per day, and verify that there will be coverage, not only for the drugs you take, but also for the dosage you take and the number of times of day you take them. (See worksheets on page 34.)

Once you decide on what you want in your plan, you must then decide which of the following you prefer:

• A stand-alone prescription drug plan, which gives you coverage for your prescription medications. If you wish to participate in the traditional Medicare program that lets you decide which health practitioners you are seen by, you should select a stand-alone plan to receive your prescription drug coverage.
• A Medicare Advantage plan, or an HMO or PPO, which includes both drug coverage and your Medicare coverage through a network of doctors and hospitals, and according to Medicare, ”typically provides more benefits at a significantly lower cost through a network of doctors and hospitals.” However, this option limits your choice of physicians and other care providers. If you choose this option, don’t sign up for Part D.

It is important to select the plan that best meets your needs. Do your own research, if possible. If you need help finding information online, ask a family member or friend. If you live in a senior community or go to a senior center, the staff there may be able to help. Once you have a clearer understanding of what plans might work for you, talk the matter over with a family member, a friend, or your physician. 

Tips for dealing with the donut hole

• Comparison-shop for the plan that has the lowest total for your drug costs in order to avoid the donut hole.
• If you reach the donut hole near the end of the year, ask your physician for free sample drugs that can last until the New Year.
• Ask your doctor if there is a less expensive generic-equivalent drug that you can safely and effectively take to reduce the costs while you are in the donut hole.
• Opt for the lower-cost generic drugs, if possible, to avoid the donut hole.
• Invest in a Part D policy that does not have a donut hole.
• If your physician or pharmacist says that an over-the-counter (OTC) drug is equivalent to a prescription that you take, and you do not expect to get out of the donut hole by the end of the year, or if the price of the OTC drug is less than the co-pay for the same drug, drug dosage, and number of dosages, then an OTC drug might be a smart option.

What do you get for your premium?

How much you pay for your Medicare Part D prescription drug coverage and what you get for your money depend on the plans available in your area and which one you choose. Monthly premiums, annual deductibles, or coverage gaps (the donut hole) vary from one plan to another.  However, the government requires that all plans offer a minimum ”standard level” of coverage. That means that plans may have different deductibles or co-payments, etc., but on average your out-of-pocket expenses should be comparable.

In 2007, all standard plans have a $250 annual deductible for covered drugs. (Deductibles are tied to inflation rates and are subject to change each year.) That means that under the standard plan you must pay the first $250 of the costs of your prescriptions. After that, your insurance coverage kicks in. Then you will pay 25 percent of the cost of your medications each year until the costs reach $2,250. This is the point at which you reach the so-called donut hole. Once your prescription drug costs exceed $2,250, you must pay 100 percent of the next $2,850 in prescription drug costs.

Once your out-of-pocket expenses for medications (including your deductible, but not your premium costs) come to slightly over $3,600, Part D’s catastrophic coverage kicks in and you pay only 5 percent of your prescription costs (or a co-payment).

A Part D plan may sometimes include OTC drugs as part of step therapy, a process in which you must start with the least expensive drug and move up until you find a drug that works well for you. In this case, the OTC drug would be provided at no additional charge.

Points to consider when deciding which plan is right for you

• Not all plans have a deductible.
• You can choose either a regional plan, which covers only prescriptions from pharmacies in a specific area (except in emergencies), or a national plan, which might be preferable for you if you are a ”snowbird” who spends part of each year away from home.
• Drugs not covered by Medicare Part A or Part B will likely be covered by Part D.
• Some state Medicaid programs may cover your prescriptions that are not covered by Medicare Part D coverage. Contact your State Medical Assistance Office.

What is not covered?

While many prescription drugs are covered by Part D, this Medicare program does not cover those drugs that are already being paid for by other Medicare programs. Because Medicare Part A covers hospitalizations, it covers prescription medications that are provided during hospital stays or stays at skilled nursing facilities. There are also certain circumstances in which Medicare Part B covers prescription drugs.

These include the following:

• Drugs that are received in hospital outpatient departments and are billed separately from the hospitalization.
• Drugs that are for end-stage renal disease and are billed separately from the dialysis.
• Drugs that are provided in physicians’ offices, such as chemotherapy, and are billed by the physician.
• Drugs that are administered via durable medical equipment, such as use of a nebulizer for respiratory medication, and are billed by pharmacy suppliers.
• Drugs that you administer yourself (such as immunosuppressive drugs and some anti-cancer drugs that are taken by mouth) and are billed by pharmacy suppliers.

Part D also does not cover ”Medicaid-excludable drugs” (see definition on page 29 of the Glossary), except drugs used to quit smoking.

However, you can purchase an enhanced-coverage plan, which will have higher monthly premiums but which may cover Medicaid-excludable drugs. Check the plan formularies before selecting a plan on this basis.

Finally, Part D does not pay for covered prescription drugs outside the hospital setting when the medication is sold as a package with tests or monitoring services.

If you find yourself in a situation where there is a dispute over which Medicare program—Part B or Part D—is responsible for coverage, refer to Medicare Part B versus Part D Coverage Issues by the Centers for Medicare and Medicaid Services. This document gives guidance for deciding which Medicare program is responsible for the drug coverage.