Medicare Part D prescription drug coverage
This information is designed to help you decide whether to enroll in a Medicare Part D drug plan and how to decide which plan is best for you. To choose the right plan you have to look closely at your needs and the drugs you take.
People with Medicare who are being treated for cancer or who are cancer survivors have a number of special issues to think about. These issues are discussed here.
Also included are answers to some of the frequently asked questions about the Medicare drug benefit.
What is the Medicare Part D drug benefit?
Medicare Part D is the prescription drug benefit, which is offered to people who qualify for Medicare insurance. People who have Medicare are called Medicare beneficiaries.
Part D coverage may help you lower your prescription drug costs. It may also help protect you from higher costs in the future. It can also give you greater access to the drugs you need to stay well or treat an illness.
To get Medicare Part D drug coverage, you must enroll in a plan that is approved by Medicare. If you join a Medicare drug plan, you usually pay a monthly premium. You’re given a Medicare Part D plan ID card to use when you get prescriptions filled.
If you decide not to enroll in a Medicare drug plan when you are first eligible (able to join), you might have to pay a penalty when you enroll later, and every month after that for as long as you’re enrolled in Part D.
If your income and resources are limited, you might qualify for Extra Help paying Part D costs. We will cover this later in the section called “ Making a Part D plan decision.”
Each year, the plans vary in cost and which drugs are covered. You can log on to www.Medicare.gov to use the plan finder to compare the available drug plans, find out whether the drugs you need are on the formularies, and learn about costs and any restrictions in coverage.
As a cancer patient, your annual drug costs may be high, so it is even more important that you look at all of the available plans to find the one that best meets your needs. Look carefully at the drugs each plan covers and how much you’ll have to pay (this is called “cost-sharing”). Medicare has an online tool to help you choose, at www.medicare.gov/find-a-plan.
What is the coverage gap, and what do I pay?
The coverage gap (also called the “donut hole”) starts when you reach a certain level of drug expense for the year. It’s the amount you must pay each year for your own prescription drugs, with some discounts. Once your total drug costs (what you and the plan pay for your prescriptions) reach a pre-set dollar amount for that year, you’re in the donut hole, where you pay more for drugs.
While you’re in the donut hole, you still get some price breaks. There are manufacturer discounts on brand name drugs, and the federal government covers a portion of generic drugs to cut down the amount you pay (see example below). You’ll still pay much more of your drug costs until your total out-of-pocket cost reaches another pre-set amount.
Reaching this second amount triggers what is called catastrophic coverage. After that, Medicare Part D will cover most of your drug costs and you will pay a small co-pay for covered drugs for the rest of that year.
A 2014 example: If your drug costs (what you and the plan pay for your prescriptions) add up to more than $2,850 in 2014 (this applies only after you’ve paid the annual $310 deductible), in most Part D plans you’ll hit the coverage gap. At this point you will pay a large percentage of your drug costs:
- No more than 72% of the plan’s cost for generic drugs
- 47.5% of the plan’s cost for eligible brand name drugs
The amount you pay for drugs, plus any discounts paid by the drug companies, will count toward your total out-of-pocket costs. You do not need to do anything to get these discounts other than use your Part D plan card. Your pharmacy will give them to you automatically.
Once your out-of-pocket costs reach $4,550, or your total drug costs hit $6,687.50, you’re out of the donut hole and into the catastrophic benefit period. After that, you will pay a co-pay of $2.55 for generic drugs. For brand-name drugs you’ll pay $6.35 or 5%, whichever is greater.
These dollar amounts change from year to year, so you will need to check this every year.
Avoiding, minimizing, or delaying the coverage gap
The Affordable Care Act lays out a plan to put an end to the coverage gap (donut hole) by the year 2020. Until then, there are some ways you can avoid or delay entering the gap, and save money on drug costs while in the gap:
- You may be able to switch to generic drugs or other less costly drugs. Ask your doctor about generic alternatives that work just as well. Even though many cancer treatment drugs do not have generics, the savings in non-cancer drugs may help a lot.
- Keep using your Medicare drug plan card, even if your drug expenses fall into the coverage gap. Using your drug plan card ensures that you’ll get the drug plan’s discounted rates and that the money you spend counts toward your catastrophic coverage.
- Look into Patient Drug Assistance Programs that may be offered by the company that makes the drug you take. You can learn more about this in our document called Prescription Drug Assistance Programs.
You can find out more about saving money by using mail-order pharmacies, generic, or less-expensive brand-name drugs online at www.medicare.gov.
Do I have to purchase Part D coverage?
The drug benefit is optional – you do not have to enroll. But if you decide to take part, you must do so during the open enrollment period (from October 15 to December 7 every year). You must enroll in one of the Medicare private drug plan options in your area, or you can enroll in a Medicare Advantage plan that offers prescription drug coverage. You can change from one plan to another during open enrollment periods.
If you do not enroll in a Medicare drug plan when you’re first eligible, and you don’t have other creditable prescription drug coverage, and you don’t get Extra Help, you’ll likely pay penalties for a long time if you ever do enroll in Part D. (See “ Getting help to pay Medicare Part A and/or Part B premiums (the Medicare Savings Programs)” for more on Extra Help.)
How does the Part D benefit help people with cancer?
The Part D drug benefit is good for Medicare beneficiaries who have been diagnosed with cancer, especially those who do not have any other way to pay for their prescriptions. Part D coverage helps pay for prescriptions purchased at a pharmacy. And Medicare Part D drug plans must accept all who apply and are eligible – no matter their age or health status.
The coverage under this benefit does have some gaps that require you to pay out of your own pocket. And not every drug on the market will be covered by every Medicare-approved drug plan. Carefully review your drug plan options and compare each plan’s covered drugs with the drugs you need. Keep in mind the plan can change, and you may need to look around again next year.
- Medicare Part D prescription drug coverage
- Special things people with cancer need to think about
- Who should enroll in Medicare Part D?
- Making a Part D plan decision
- Getting help to pay Medicare Part A and/or Part B premiums (the Medicare Savings Programs)
- Formularies and drug coverage
- Where can I use my Part D drug coverage to fill my prescriptions?
- How much will the Part D drug plan cost?
- Things to know once you’ve chosen a Part D drug plan
- Switching drug plans in the future
- Frequently asked questions
- Where can I get more help?
- Are you ready to get started?
Last Medical Review: January 22, 2014 Last Revised: January 23, 2014