Medicare Prescription Drug Plans are private insurance plans that cover some of the costs of prescription drugs for people with Medicare. Medicare drug plans are also called Medicare Part D. There is no single Medicare prescription drug plan. There are a variety of plans, with different costs and benefits. All plans must be approved by Medicare.
Private insurance companies that offer Medicare drug plans get subsidies from the federal government to help cover their costs. People who join prescription drug plans also share in the costs. Drug plan members pay monthly premiums, annual deductibles, coinsurance/copayments, and a coverage gap. People with limited income and resources can get extra help to pay some or all of these costs.
Medicare Part D started January 1, 2006.
All people with Medicare can get prescription drug coverage. There are no income or asset limits. Your health status does not matter. You will not be turned down or charged more because you are in poor health or because your current prescription drug costs are very high.
People with Medicare can get drug coverage in one of two ways:
- by joining a Medicare Advantage Plan or other Medicare Health Plan with Medicare drug coverage included
- by joining a separate Medicare Part D Prescription Drug Plan
You do not have to join a Medicare drug plan if you do not want to. It is your choice. However, if you do not join a plan when you are first eligible, you will be charged a penalty if you decide to join at a later date. There is an exception if you have drug coverage at least as good as Medicare drug coverage through your employer or union. This is called creditable coverage.
Medicare drug plan benefits vary from one plan to another. On average, Medicare drug plans cover about 50% of prescription drugs costs. The benefits you will get depend on your prescription drug needs, the plan you choose, and whether you qualify for extra help with drug plan costs.
All Medicare Part D Prescription Drug Plans offer these minimum benefits in 2012:
- An annual deductible no greater than $320
- Average monthly premiums of about $30 for standard prescription drug coverage
- Average coinsurance rates of 25% after the deductible and up to the total drug cost benefit limit of $2930
- 14% coverage for generic drugs during the coverage gap
- 50% manufacturer discount on most brand-name drugs during the coverage gap
- 95% coverage for prescription drugs after the out-of-pocket limit has been reached
- Coverage for a wide range of drugs in the most commonly prescribed categories (does not include barbiturates, benzodiazepines, and over-the-counter drugs)
- An appeals process for drugs not included in the plan’s formulary
Note: There is a coverage gap—called the “donut hole”—after the benefit limit is reached, until out-of-pocket payments reach $4700
Once you are in the coverage gap, your drug benefits change. In 2012, your plan pays 14% and you pay 86% of the cost of generic drugs during the coverage gap. In addition, drug manufacturers give a 50% discount on brand-name prescription drugs during the coverage gap.
For most Medicare drug plans in 2012, the donut hole works like this:
- You pay a deductible of $320.
- After the deductible, you pay 25% of your prescription drug costs and Medicare pays 75% of your prescription drug costs until the total cost of your prescription drugs reaches the benefit limit of $2930 (including the deductible). At this point, the “donut hole” coverage gap begins.
- In the donut hole, your drug benefits change. Your plan pays 14% of your generic drug costs in the donut hole and you pay the rest. Drug manufacturers give a 50% discount on brand-name drugs in the donut hole and you pay the rest.
- When your total out-of-pocket costs equal $4700, you are out of the donut hole and Medicare catastrophic coverage begins. Note: The entire cost of brand-name drugs counts as out-of-pocket costs even though you get a 50% discount.
If you want additional drug benefits during the coverage gap, you can join a higher-priced plan with extra benefits.
Different plans have different monthly premiums, annual deductibles, and coinsurance rates
- Some plans pay more of the costs during the coverage gap
- Some plans let you use many different pharmacies; some plans only let you use a few pharmacies
- Some plans offer a 90-day supply option
- Some plans offer a mail-order option
- Each plan has its own list of drugs covered by the plan (drug formulary). Drugs that are covered by one plan might not be covered by another.
- Most plans have prescription drug levels or tiers. Generic drugs usually cost less than brand name drugs.
The list below contains the highest rated Medicare Part D prescription drug plans in the state of Massachusetts. It is for informational purposes only and some listings may be inaccurate or missing. The list was provided by the Centers for Medicare and Medicaid Services (CMS), but due to the variance in plans based on county, city, and region, some options may not be available in your location.