Medicare and Perscription Drugs
Authored By: Legal Hotline for Texans; Centers for Medicare & Medicaid Services
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How do I get Medicare drug coverage?
Medicare drug coverage is called Medicare Part D. You have to get Medicare Part D through private insurance companies. There are two kinds of plans that have prescription coverage: Prescription Drug Plans or Medicare Advantage Plans. Prescription Drug Plans (PDPs) only pay for drugs. Medicare Advantage Plans (MAs) pay for both medical care and drugs. Plans vary in costs and the drugs covered. The list of drugs covered by a plan is called its formulary. You must sign up for a Part D plan. Signing up is called enrolling in the plan. Before enrolling in any plan, check the plan’s formulary to make sure that the drugs you take will be paid for by the plan. Plans also have different co-pay amounts. A co-pay is the part of the drug cost that the patient has to pay.
Who can get Part D coverage?
People who are on Medicare can get Part D coverage. Enrollment is voluntary. To join a PDP, you must have Medicare Part A or Part B. To join a MA plan, you must have both Part A and Part B. Most people should join when they are first eligible. There are late enrollment penalties for people who sign up late.
When can I enroll?
Between October 15 and December 7, anyone can join, switch, or drop a Medicare drug plan. This is called the Open Enrollment Period. During the Open Enrollment Period, people can switch to a different Medicare drug plan if they want to. When you join or switch plans, your new coverage usually begins on January 1 as long as the plan gets your request by December 7.
What do I need to do to enroll?
Once you choose a Medicare Drug Plan, you can sign up for the plan by filling out a paper application, by calling the plan provider, by filling out an application online on the plan’s Web site or on www.medicare.gov, or by calling 1-800-MEDICARE.
When you are first eligible for Medicare, you can join during the 7-month period that begins 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65.
If you get Medicare due to a disability, you can join during the 7-month period that begins 3 months before your 25th month of disability, and ends 3 months after your 25th month of disability. You’ll have another chance to join that starts 3 months before the month you turn 65, and ends 3 months after the month you turn 65.
If you get a low income subsidy (also called Extra Help), you can join, switch or drop a Medicare drug plan anytime. Low income subsidy is a program that helps low income persons pay for some of their Medicare drug plan costs.
If you decide not to join a Medicare drug plan when you’re first eligible, and you don’t have other creditable prescription drug coverage, or you don’t get the low income subsidy, you will likely pay a late enrollment penalty.
What is the Part D Late Enrollment Penalty?
The late enrollment penalty is an amount added to your Part D premium. You may owe a late enrollment penalty if, at any time after your initial enrollment period is over, there is a period of 63 or more days in a row when you don’t have Part D or other creditable prescription drug coverage.
The cost of the late enrollment penalty depends on how long you went without creditable prescription drug coverage. The late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($32.34 in 2011 and $31.08 in 2012) times the number of full uncovered months you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium. The national base beneficiary premium may increase each year, so the penalty amount may also increase every year.
Example: Mrs. Jones didn’t join when she was first eligible by May 15, 2007. She joined a Medicare drug plan between October 15-December 7, 2010, for an effective date of January 1, 2011. Since Mrs. Jones didn’t join when she was first eligible and went without other creditable drug coverage for 43 months (June 2007-December 2010), she is charged a monthly penalty of $13.90 in 2011 ($32.24 national base rate premium X .01 penalty rate X 43 months = $13.90). She pays this late enrollment penalty monthly in addition to her plan’s monthly premium.
If you don’t agree with your late enrollment penalty, you can ask Medicare for a review or reconsideration.
How much does Medicare Part D coverage cost?
Each plan is different, but Medicare sets out the minimum that drug plans have to cover. Your cost depends on the drugs you take, the plan you choose, and the pharmacy you use. Your costs will include a monthly premium, a yearly deductible, copayments or coinsurance, costs in the coverage gap, costs if you get Extra Help, and costs if you pay a Late Enrollment Penalty. These amounts vary from year to year according to your plan. The monthly premium is the money you pay every month to be covered by the plan. The yearly deductible tells how much money you have to spend out of your pocket before the insurance company begins paying for your drugs. Co-payments are your share of each prescription’s cost.
You should be aware of the coverage gap. Some people call it the Donut Hole. Most plans have a limit on the amount of money they will pay. Then you will have to pay all costs for your drugs up to your out-of-pocket limit. Yearly deductibles, coinsurance or copayments, and the costs for drugs are counted toward the out-of-pocket limit. Once you enter the coverage gap, you get a 50% manufacturer-paid discount on covered brand-name drugs. Although you’ll only pay 50% of the price for that brand name drug, the entire price will count as out-of-pocket spending, which will help you get out of the coverage gap. You’ll also save 7% of the plan’s cost for all generic drugs until you reach the end of the coverage gap. Premium payments are not included.
Example: Mr. Smith has a $2830 yearly limit. This is the retail cost of the drugs not the discounted price that he pays. His deductible is $310. The retail cost of Mr. Smith’s drugs is $800 per month. In January, he will pay his deductible of $310. In February and March, he will pay his co-pay. In April, he will reach the $2830 limit, so his plan will quit paying for his drugs until he has paid $4550 including his deductible, co-pays, and drug costs. So, he will have to pay the whole cost of his drugs until September.
Your actual drug plan costs will vary depending on: the prescriptions you use and whether your plan covers them, the plan you choose, whether you go to a pharmacy in your plan’s network, whether your drugs are on your plan’s formulary, and whether you get Extra help paying your Part D costs.
What if I have problems paying for my Part D plan?
If you are struggling with your drug costs, you may qualify for a low income subsidy (LIS). Depending on your income and assets, you may qualify for payment of premiums, deductibles, and reduced co-pays for your medications.
How do I apply for low income subsidy (LIS)?
Call the Social Security Administration at 800-772-1213. You can also apply online at www.ssa.gov or in person at your local Social Security office.
For more information…
Your local Area Agency on Aging has benefits counselors who can help you evaluate plans and see whether you qualify for the Low Income Subsidy. Call (800) 252-9240 to locate your local office.
Centers for Medicare & Medicaid Services: (800) 633-4227or go to www.medicare.gov to request the official government handbookMedicare & You.
Legal Hotline for Texans: (800) 622-2520
Speak to an attorney. Advice is free for Texans 60 and over or for anyone eligible for Medicare.