Medicare Part D
Medicare Part D is the program created by the federal Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 to provide some assistance for Medicare beneficiaries to pay for outpatient prescription drug costs. It is an optional program available to Medicare beneficiaries eligible for Medicare Part A and/or enrolled in Part B.
The program includes an annual open-enrollment period of November 15 through December 31, during which you can enroll or choose to change to another Prescription Drug Plan (PDP). Your coverage will begin on January 1 of the following year. Individuals not yet on Medicare will be able to join a PDP whenever they become eligible for Medicare.
Enrollment in Medicare Part D is voluntary, and you are not required to participate. However, you may have to pay a penalty if you decide to sign up after your eligible enrollment period ends. The late enrollment penalty will equal one percent of the base premium for every month that you waited to join.
Medicare Part D coverage will be offered by approved PDPs. The PDP benefits will be administered by private companies, some of which may be insurance companies. There are two types of Medicare prescription drug plans. One is a stand-alone prescription drug plan (PDP) which offers only prescription drug coverage. The other is a Medicare Advantage plan with prescription drugs (MA-PD) which provides all your Medicare-covered services and includes prescription drug coverage.
The cost of your Medicare Part D coverage will vary based on the PDP that you choose. If you are not eligible for low-income assistance (referred to as Limited Income Subsidy), you will pay a monthly premium, an annual deductible, and a percentage of your drug costs. Your PDP will pay for your outpatient prescription drug expenses after you have met deductible and coinsurance amounts. Deductible and coinsurance amounts are those expenses you must pay out of pocket before Medicare Part D will pay any money for your outpatient prescription drugs.
The prescription drugs covered by your PDP will vary based on the plan that you choose. If you enroll in a Medicare Part D prescription drug plan, it is important that you understand that your PDP will pay for only those prescriptions in the PDP's formulary. A formulary is a list of specific drugs a Medicare PDP will cover. Only the cost of drugs covered by your PDP will count toward the deductible and out-of-pocket limits. Outpatient prescription drug expenses not covered by the PDP or drugs covered by a drug discount card that you have will not count toward the out-of-pocket expense requirement of your PDP.
During 2016, the annual deductible for the standard Medicare Part D PDP cannot be more than $360. The coinsurance and copayments can vary by PDP and by the drug covered by the PDP. All PDPs offer coverage when you and the plan have spent $3,310. Some PDPs offer coverage during the gap; however, this coverage is usually limited to generic drugs.
Costs in the Coverage Gap
Most Medicare Prescription Drug Plans have a coverage gap (also called the "donut hole"). This means there's a temporary limit on what the drug plan will cover for drugs.
Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. In 2016, once you and your plan have spent $3,310 on covered drugs, you're in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs won't enter the coverage gap.
Once you reach the coverage gap in 2016, you'll pay 45% of the plan's cost for covered brand-name prescription drugs. You get these savings if you buy your prescriptions at a pharmacy or order them through the mail. The discount will come off of the price that your plans has set with the pharmacy for that specific drug.
In 2016, Medicare will pay 42% of the price for generic drugs during the coverage gap. You'll pay the remaining 58% of the price. What you pay for generic drugs during the coverage gap will decrease each year until it reaches 25% in 2020. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.
If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan's coverage has been applied to the price of the drug. The discount for brand-name drugs will apply to the remaining amount that you owe.
Items that count towards the coverage gap:
- Your yearly deductible, coinsurance, and copayments
- The discount you get on brand-name drugs in the coverage gap
- What you pay in the coverage gap
Items that don't count towards the coverage gap:
- The drug plan premium
- Pharmacy dispensing fee
- What you pay for drugs that aren't covered
Information regarding Medicare Part D can be obtained from the Wisconsin Prescription Drug Helpline for Medicare Beneficiaries at 1-855-677-2783 (toll-free).
- Participation in the Medicare Part D program is voluntary.
- You do not have to pay an enrollment fee or pay for assistance to enroll in Medicare Part D.
- You will have to pay for Medicare Part D coverage, which may include monthly premiums and annual deductibles, coinsurance and copayments.
- You may be eligible for help to pay for your Medicare Part D prescription drug coverage based on your income.
- You do not have to enroll in Medicare Part D in order to keep your Medicare Part A and Part B coverage.
- You do not have to buy any additional insurance products to be eligible to enroll in Medicare Part D and should be wary of any individual who uses a Part D sales pitch to sell other insurance products.
Extra Help for People with Limited Income and Resources
Various levels of assistance are available for low-income Medicare beneficiaries to help meet the cost of Part D premiums, deductibles, and co-insurance. Additional information regarding the Limited Income Subsidy program is available at your local Social Security Office at www.ssa.gov or Medicaid office at dhs.wisconsin.gov/Medicaid.
If your income is low, you may qualify for Extra Help, also called Low Income Subsidy or LIS. This is a federal program that helps you pay for most of the costs of Medicare prescription drug coverage. If your 2015 income is below $17,655 ($23,895 for couples) and your resources are less than $13,640 ($27,250 for couples), you may qualify for Extra Help. The amount of assistance you qualify for will depend on your income.