Understanding and Comparing Medicare Part D

On December 8th 2003, as part of Congressional legislation called the Medicare Modernization Act of 2003 or (MMA), Medicare Part D came into being. For the first time in American history seniors could count on Medicare to assist them with their prescription drug costs. Though the MMA has been around for the past five years many of my new clients continue to ask me to explain how their prescription drug benefits work, which I always gladly do.

All the insurance companies offering these plans must adhere to a minimum standard of policy design. From this base plan they all enrich their plans and premiums differently. It is this base policy that I will discuss, so it is important to check your actual policy for the details that apply to you.

There are four phases of coverage:

• Annual Deductible
• Initial coverage
• The Gap
• Catastrophic Coverage

As of 2008, all insurance companies are required to offer a base plan that has a maximum deductible of $275 in addition to their other plans. It is important to remember that deductibles will change over time. When looking at plans it is important to weigh premium cost against benefit. As of right now there are many generous and affordable plans available that do not have any deductible at all. For those on a MAPD: Most Arizona Medicare Advantage plans do not have any deductible at all.

Initially the plan coverage your drug purchases up to $2510. During this period all you are required to do is pay the co-pays as described in your outline of benefits. Though you are only paying co-pays your insurance company is calculating their true cost for each of your medicines. The true cost being calculated is the insurance carriers pre-negotiated discounted retail price. When you have purchased drugs totaling $2510.00 (true cost) your insurance company will notify you that you have reached the Gap.

During the “Gap” your insurance company will continue to extend to you their pre-negotiated discounted price (the true cost) but you will pay that cost with your own funds, no co-pays. Some insurance companies will cover generics in the gap but many do not.

Once you have spent $4050 you have entered into the catastrophic phase. During this period or until the end of the calendar year all you will pay is $2.25 for generics and $5.60 for all other drugs.

These plans are annual renewable contracts. Stand alone plans can be purchased or replaced for 11/15 through 12/31 each year for a start date of January 1 of the New Year. For those on a MAPD you can switch again from 01/01 through 03/31 of each year as well.

Because these are annual renewable contracts the best way to decide which one is the right one for you, is to actually Compare Medicare Part D Plans side by side you could save hundreds by making an informed decision!
Click to compare & save