- Stand-alone prescription drug plans (PDPs)
- Medicare Advantage Prescription Drug plans (MA-PDs)
If you are enrolled in original, fee-for-service Medicare, you can enroll in a PDP. These plans only provide prescription drug coverage. In 2012, California has 33 stand-alone prescription drug plans with monthly premiums ranging from $15.10 to $114.90. The insurance company or plan sponsor sets the premium in advance—it is not based on your health condition. In addition to the premium, you may also need to pay a deductible and/or a copayment or coinsurance for every prescription.
Certain MA-PD plans may also have two separate premiums—one for Medicare Part A and B benefits and one for Part D prescription drug benefits.
You may have heard about the so-called “donut hole”—a gap in Part D drug coverage caused by conflicts between various “thresholds” of coverage and out-of-pocket expense limits. If you fall into this hole, you may have to pay several thousand dollars for certain, high-price drugs before the plan takes full effect. The donut hole is a problem because calculating out-of-pocket expenses is complicated. For example, a Part D plan’s premium is an out-of-pocket expenditure but it is not counted; expenditures that are counted toward the out-of-pocket threshold include deductibles and cost-sharing for drugs covered by the plan. But, if you pay for a drug that is not covered by the plan or you don’t buy it at a network pharmacy, your payment is not counted toward the threshold.