The Medicare Part D program provides beneficiaries with assistance paying for prescription drugs. The drug benefit, added to Medicare by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, (MMA), began in January 2006. Unlike coverage in Medicare Parts A and B, Part D coverage is not provided within the traditional Medicare program. Instead, beneficiaries must affirmatively enroll in one of many hundreds of Part D plans offered by private companies.
The Medicare law establishes a standard Part D drug benefit. Plans must offer a benefit package that is at least as valuable as the standard benefit. The standard benefit is defined in terms of the benefit structure, not the particular drugs that must be covered.
Part D drug plans are not required to offer the standard benefit, but can offer alternative prescription drug coverage. Alternative coverage must be “actuarially equivalent” to the standard benefit. In other words, the value of the benefit package must be equal to or greater than the value of the standard benefit package. In an actuarially equivalent plan the cost-sharing varies through the use of such mechanisms as tiered co-payments.
For example, a beneficiary’s share of cost may be less for a generic or preferred brand name drug than for a non-preferred brand name drug. However, a plan that offers an alternative benefit package cannot impose a higher deductible or require a higher out-of-pocket limit than required by the standard benefit.
Plans can also offer enhanced alternative coverage that might also include changes to the deductible and the initial coverage limit, although the deductible cannot be higher than the amount set in the statute. Enhanced alternative coverage might also include coverage of drugs that are excluded under Part D.
A Prescription Drug Plan (PDP) that wants to offer a drug plan with enhanced alternative coverage in a region must also offer a PDP with the basic benefit package in that region.
Because the deductible, initial coverage limit and annual out-of-pocket threshold change each year according to the changes in expenditures for Part D drugs, beneficiary out-of-pocket expenses may increase annually. The Medicare law does not mandate a set premium amount. These costs as well as the list of covered drugs vary from plan to plan and from region to region.
Beneficiaries should take time to review the various plans available to them in light of their current and anticipated needs and financial resources.
Some other points, provided by SHICK:
- Medicare prescription drug coverage is available to people with Medicare.
- The beneficiary must have Medicare Part A and/or Part B.
- Joining a plan is a choice. To get Medicare prescription drug coverage, beneficiaries must choose and join a Medicare Prescription Drug Plan.
- Depending on their situation, there are several different time periods when beneficiaries can join a plan.
- If they join, their costs will vary depending on which plan they choose.
- Many people with limited income and resources will get extra help paying for their prescription drug coverage. People with the lowest incomes and resources will get the most help.
And this important definition:
A formulary is a list of drugs covered by a plan The Medicare Part D plan formularies must include a range of drugs in each prescribed category. This ensures that people with different medical conditions can get the treatment they need.