Source: Centers for Medicare and Medicaid Services (CMS)
Q: What is Medicare Prescription Drug Coverage?
A: Medicare prescription drug coverage is insurance provided by private companies that have been approved by Medicare. Medicare prescription drug coverage is available to everyone with Medicare. This drug coverage may help lower prescription drug costs and help protect against higher costs in the future. You can get Medicare prescription drug coverage through:
Medicare Prescription Drug Plans – Prescription drug coverage available through insurance plans that can be added to the Original Medicare plan and some Medicare Advantage Plans; or
Medicare Advantage-Prescription Drug Plans - Health plan options that are part of the Medicare Program. These plans generally include Medicare-covered health care through that plan. This coverage can also include prescription drug coverage
You will pay a monthly premium each month for the plan that you choose. Information regarding standard Medicare prescription drug coverage is provided under the question “What are the out-of-pocket costs for Medicare prescription drug coverage?” Note: Some plans might offer more coverage and additional drugs for higher monthly premiums.
If you decide not to join a Medicare drug plan when you are first eligible, you may have to pay a penalty if you decide to join later.
Q: What are the out-of-pocket costs for Medicare Prescription Drug Coverage?
A: When you get Medicare prescription drug coverage, you pay part of the costs and Medicare pays part of the costs. You pay a premium each month to join the drug plan. If you have Medicare Part B, you also pay your monthly Medicare Part B premium. If you belong to a Medicare Advantage Plan or Medicare Cost Plan, the monthly premium you pay to the plan may increase if you add prescription drug coverage.
Your costs will vary depending on which plan you choose. Your plan must, at a minimum, provide a standard level of coverage as shown below. Some plans offer more coverage or lower premiums.
Standard Coverage (the minimum coverage drug plans must provide in 2009)
Effective January 1, 2009, for covered drugs you will pay:
- A monthly premium (varies depending on the plan you choose)
- The first $295 per year for your prescriptions. This is called your deductible.
After you pay the $295 yearly deductible, here's how the costs work:
- You pay 25% of your yearly drug costs from $295 to $2,700, and your plan pays the other 75% of these costs, then
- "Coverage Gap" or "Donut Hole" - You pay 100% coinsurance once you have spent $896.25 out-of-pocket (deductible and coinsurance). You will be responsible for all the costs of your medication until the out-of-pocket expense reaches $4,350.
- You pay a coinsurance amount (like 5% of the drug cost) or a copayment (like $2.40 or $6.00 for each prescription) for the rest of the calendar year after you have spent $4,350 out-of-pocket. Your plan pays the rest.
Q: How do I pay for the coverage? Can it be deducted from my Social Security or my retirement check?
A: In general, there are three ways to pay your Medicare drug plan premium:
- You can have your premium automatically deducted from a savings or checking account, or charged to a credit or debit card
- You can have the premium deducted from benefits you get from Social Security if your monthly payment covers your necessary deduction.
- Your Medicare drug plan can send you a bill each month. (For more information about your Medicare drug plan premium or ways to pay for it, call your plan.)
Note: It will take two to three months for your premium deduction to begin after your coverage starts. When you first join a Medicare drug plan, your premiums for your first two or three months of coverage will be combined. For example, if you enroll in or switch Medicare drug plans in December for coverage that begins in January, your first premium payment will probably be due in February. It will include your premium for January and February.
Q: Do I have to join a Medicare Prescription Drug Plan?
A: No. Joining a Medicare prescription drug plan is your choice. However, if you don’t join a plan from November 15th to December 31st, each year (some exceptions may apply) and you don’t currently have a drug plan that covers at least as much as standard Medicare prescription drug coverage, you will have to wait until the next annual enrollment period (November 15th to December 31st) to join. When you do join, your premium cost will go up at least 1% per month for every month that you waited to join(some exceptions may apply) . Like other insurance, you will have to pay this penalty as long as you have Medicare prescription drug coverage.
Q: Is there someone to help me choose a Medicare Prescription Drug Plan?
A: Talk to a family member, friend, or other caregiver to help you decide what drug coverage meets your needs. You may also use the following options:
- The Medicare Prescription Drug Plan Finder located at www.medicare.gov provides information about the plans available in your area.
- Call 1-800 MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.
- Look for information about events in your local newspaper or listen for information on the radio.
- Call your local office on aging. For the telephone number, visit www.eldercare.gov on the Internet.
Q: When can I join a Medicare drug plan?
A: Most Medicare eligible recipients will join a Medicare prescription drug plan during the annual enrollment period (November 15th to December 31st) each year. Some exceptions may apply. The enrollment is extended to March 31st, if enrolling in a Medicare Advantage - prescription drug plan.
Q: When and how often can I switch my Medicare drug plan?
A: Generally if you join a Medicare Prescription Drug Plan, you can only change plans once a year. You can choose to switch your current plan during each annual enrollment period (November 15th to December 31st). In certain cases, such as if you move or enter a nursing home, you can switch your plan at other times.
If you have both Medicare and Medicaid, you can change plans monthly.
Q: Should I join a Medicare drug plan even if I don't take many prescription drugs?
A: You should consider joining a Medicare Prescription Drug Plan. If you do not join when you become eligible and do not have coverage as good as or better than what Medicare offers, then when you do join, your premium cost will go up at least 1 percent per month for every month that you waited to join. Like other insurance, you must pay this penalty as long as you have Medicare prescription drug coverage.
Q: What do I need to do to stop the automatic premium deduction from my current Medicare drug plan if I switch plans?
A: You don't need to do anything. Your enrollment in a new plan will automatically stop the premium deduction from your current drug plan. It generally takes one to two months before the premium is no longer withheld. Once this occurs, you will begin to see premium deductions for your new plan.
Q: When will my coverage begin?
A: If you enroll during the annual enrollment period, your coverage should begin on January 1st of the following year. If you are eligible to enroll at any other time of the year, your coverage will become effective the first day of the following month.
Q: What does a Medicare Prescription Drug Plan cover?
A: Medicare prescription drug plans will cover generic and brand-name drugs. Plans may have rules about what drugs are covered in different drug categories to be sure people with different medical conditions can get the treatment they need.
Most plans will have a formulary, which is a list of drugs covered by the plan. This formulary could change throughout the year. However, you must be notified at least 60 days in advance before a drug you use is removed from the list or if the costs are changing. If your doctor thinks you need a drug that isn't on the list, or if one of your drugs is being removed from the list, you or your doctor can apply for an exception or appeal the decision.
Q: What if I need a drug that isn’t on the formulary or is covered at a higher cost?
A: If you need a drug that is not on the covered drug list, or that is on the list but you think it should be covered for a lower copayment, you can do the following:
- Contact the plan and ask for an exception. You will probably have to provide information from your doctor about why you need the drug your plan won’t cover.
- If your plan denies the exception, you can appeal. Your plan must give you information on how to appeal.
Q: What does the term “extra help” mean when you are talking about Medicare prescription drug coverage?
A: Medicare prescription drug coverage is available to everyone with Medicare, regardless of income and resources, health status, or current prescription expenses.
There is also “extra help” (also called a “low-income subsidy”) to help people with Medicare who have limited income and resources pay for Medicare prescription drug coverage. If you qualify for extra help, you will get help paying for:
- Your Medicare drug plan’s monthly premium, and
- Some additional costs you would normally pay for your prescriptions.
The amount of extra help you get will be based on your income and resources. You can apply for extra help by calling Social Security at 1-800-772-1213 (TTY 1-800-325-0778) or visiting www.socialsecurity.gov.