The Basic Details About Prescription Drug PlansPosted by Medicare Made Clear
Original Medicare (Part A & Part B) does not pay for most prescription drugs. If you have Original Medicare and want prescription drug coverage, you have two options. You can switch from Original Medicare to a Medicare Advantage (Part C) plan that includes drug coverage. In some cases, there is no additional premium for this drug coverage. But not all Part C plans include drug coverage. Your other option is to join a Part D prescription drug plan. This is sometimes called a standalone prescription drug plan.
As you consider signing up for prescription drug coverage, there are a few things to keep in mind:
- You can make changes to your plan only at certain times of the year, unless you qualify for a Special Election Period.
- Remember to consider more than just the cost of premiums when you are comparing prescription drug plans. Co-payments or co-insurance, and deductible amounts can vary widely. It’s also important to find out if your drugs are on the plan’s list of drugs they will cover. This list may be called a formulary.
- People who have low incomes may be able to get Extra Help paying for their premiums, co-payments or co-insurance, and deductibles. The Extra Help program is offered by the Social Security Administration. Some states and drug companies also offer assistance programs to help people pay for their drugs.
Paying for Your Drugs
The amount you will have to pay for your drugs varies according to which plan you choose and what drug payment stage you are in. Prescription drug plans have four drug payment stages:
1. Yearly Deductible Stage—if your plan has a deductible, you’ll start in this coverage stage when you fill your first prescription of the year. You will pay the total cost of your drugs until you reach your deductible amount. People with higher incomes may have to pay a higher deductible.
2. Initial Coverage Stage—in this drug payment stage you will have to pay a percentage of the drug’s total cost. This percentage is referred to as a co-payment or co-insurance. The plan will pay for the rest. You will stay in this drug payment stage until your total drug costs reach $2,850. Your total drug costs do not include the amount you pay for your premiums.
3. The Coverage Gap Stage—this drug payment stage is also called the Donut Hole. This drug payment stage is when you’ll have to pay a greater share of your drug costs. For 2014, after your total drug costs reach $2,850 you enter the Coverage Gap and will have to pay 47.5% of the cost of your brand name drugs. For generic drugs you will have to pay 72% of the cost. You stay in this drug payment stage until your total out-of-pocket costs reach $4,550. Your total out-of-pocket costs do not include the amount you pay for your premiums. The Coverage Gap amounts and percentages may change annually, until the year 2020 when it will be eliminated.
4. Catastrophic Coverage Stage—after your total out-of-pocket costs reach $4,550 you will reach the Catastrophic Coverage Stage and you’ll have to pay only a small co-payment or co-insurance amount for your drugs. You will remain in this drug payment stage for the rest of the plan year.
No matter what drug payment stage you are in, the calculator will reset at the start of each plan year.
For more information, contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.
Medicare.gov: Learn more about Medicare prescription drug plans on the U.S. government website of the Centers for Medicare and Medicaid Services.
Extra Help: Find out if you qualify for extra help paying drug costs Medicare doesn’t cover.