Medicare Part D
Medicare Part D is the new 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 Medicare Part D prescription drug coverage began January 1, 2006. 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. In 2009, 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 2009, the annual deductible for the standard Medicare Part D PDP cannot be more than $295. The coinsurance and copayments can vary by PDP and by the drug covered by the PDP. All PDPs offer coverage when your out-of-pocket costs exceed $4,350. Some PDPs offer coverage during the gap between $2,700 in total costs and $4,350 in out-of-pocket costs. However, this coverage is usually limited to generic drugs.
After you pay the yearly deductible for the standard Medicare Part D PDP, you may be responsible for the following portion of your drug costs:
- 25% of drug costs between $296 and $2,700 ($601).
- 100% of drug costs between $2,701 and $6,153.75 ($3,452.75). This is called the "coverage gap" and also referred to as the "doughnut hole."
- 5% of drug costs above $6,153.75.
The annual deductible, coverage level, and coverage gap will change each year based on the increase in costs to the Medicare Part D program.
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.
Beginning in 2006, new Medicare supplement insurance policies issued will no longer include outpatient prescription drug coverage. In general, only Medicare Part D Prescription Drug Plans (PDPs) or Medicare Advantage plans will be offering outpatient prescription drug coverage.
Information regarding Medicare Part D can be obtained from the Wisconsin Prescription Drug Helpline for Medicare Beneficiaries, at www.cwag.org/legal/prescription-drug/--or call 1-866-456-8211 (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
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 2008 income is below $15,600 ($21,000 for couples) and your resources are less than $11,990 ($23,970 for couples), you may qualify for Extra Help. The amount of assistance you qualify for will depend on your income.
You can apply for Extra Help to assist in paying for your Medicare prescription drug coverage through the Social Security Administration (SSA) by means of paper or online application. You can contact the SSA at www.ssa.gov or by phone at 1-800-772-1213. You also can apply for Extra Help at your local Medicaid office at dhs.wisconsin.gov/Medicaid.