Medicare Part D is a voluntary prescription drug benefit which has been available to all people with Medicare (Part A and/or Part B) since January 2006. The Part D benefit is provided through private health insurance companies who work with Medicare to negotiate discounts on drug prices.
Medicare beneficiaries can access this benefit by enrolling in a Medicare-approved private prescription drug (“Part D”) plan. It can be:
- a “stand-alone” prescription drug plan (PDP), which offers only drug coverage, or
- a Medicare Advantage prescription drug plan (MA-PD), that covers all Medicare benefits, including prescription drug coverage, through a managed care plan.
Like other insurance, Part D plans usually charge a monthly premium, an annual deductible and a share of the cost of prescriptions (copay). Costs vary depending on the individual plan chosen.
All drug plans have to provide at least a standard level of coverage, which Medicare sets. However, some plans offer more coverage and cover additional drugs but may charge a higher monthly premium.
Because drug plans vary in terms of which prescription drugs are covered, how much you have to pay, and which pharmacies you can use, it is important for beneficiaries to choose a plan that best meets their prescription drug needs.
Although Part D plans vary, they each have this general overall structure to their standard benefit:
- Deductible. Many, but not all, plans charge an annual deductible.
- Initial Coverage Limit (ICL). Beneficiaries responsible for 25% of cost sharing; plans pick up 75%.
- Coverage Gap (“Donut Hole”). Beneficiary responsible for a much larger share of cost sharing. Up until 2011, beneficiaries paid 100% of the cost sharing during the coverage gap.
- The coverage gap works like a second deductible. The beneficiary resumes responsibility for most of the cost sharing until TrOOP (True Out Of Pocket) limit is reached. TrOOP includes the initial deductible (if any) plus any copayments or coinsurance paid during the ICL; TrOOP does not include the monthly premium. Plans cannot change this feature.
- The coverage gap is being phased out over time as a result of the federal Health Care Reform (HCR) legislation passed in 2010:
- In 2010, beneficiaries who reached the coverage gap received a $250 rebate.
- In 2011, most brand name drugs purchased while in the coverage gap were discounted by 50%, with generics discounted by 7%.
- In 2012, most brand name drugs in the coverage gap were discounted at 50%, with generics discounted at 14%.
- In 2013, most brand name drugs in the coverage gap will be discounted at 52.5%, with generics discounted at 21%.
- By 2020, the coverage gap will be eliminated.
- Catastrophic Coverage (After TrOOP limit is reached). Beneficiary responsible for greater of 5% of cost of drug, or copayment of $2.60 for generics or $6.50 for brand-name drugs (2012).
- In 2013, the copayments increase to $2.65/generic and $6.60/brand name.
Each Part D plan has its own formulary, which lists all the drugs it covers and the tier the drugs are in. While plans are not obligated to cover all drugs, every plan has to follow certain basic requirements so that beneficiaries will have access to drugs for any medical condition they have or develop.
Plans are required to cover all or substantially all drugs in these six categories:
- Anti-neoplastics (cancer)
- Antiretroviral (for treatment of HIV/AIDS)
- Immunosuppressant (for organ and tissue transplant patients)
On the other hand, some types of drugs are not covered under standard Part D coverage. These include:
- Cold medicine
- Cosmetic or hair growth drugs
- Drugs covered under Medicare Part A or Part B
- Drugs for anorexia, weight loss, or weight gain
- Drugs for treatment of erectile dysfunction
- Drugs prescribed “off-label” (for treatment of a condition other than the one indicated on the drug’s FDA-approved labeling and for an indication not approved by Medicare)
- Fertility drugs
- Over-the-counter drugs
- Prescription vitamins and minerals
Plans must obtain federal approval of their formularies and must make their formularies publicly available.
Even if a person with Medicare does not take many prescription drugs at this time, they still should consider enrolling in a Part D plan or seeking creditable coverage from another source. Those who do not enroll in a plan when first eligible, and do not have creditable coverage (coverage for prescription drugs that is determined to be at least as good as standard Part D coverage), will have to pay a penalty for late enrollment. Others with creditable coverage—such as insurance through a former employer or union, the Veterans Administration (VA), TRICARE for Life, or the Indian Health Service—will not be subject to a penalty for late enrollment.
The late enrollment penalty is equivalent to 1 percent of the National Base Beneficiary Premium (rounded to the nearest 10 cents) per full month that the person with Medicare was not enrolled in a Medicare Prescription Drug Plan and did not have creditable coverage.
In 2012, the National Base Beneficiary Premium is $31.08 so the penalty would be $31.08 X 1%, or $.31 per month. If the Medicare beneficiary has had creditable coverage with a gap of no more than 63 days from when that coverage ended and Medicare Part D begins, they will not be subject to the penalty.
Finally: The New York State Department of Health has a Prescription Drug Price Comparison at its website that shows the value comparison for 150 commonly prescribed drugs with a small number of surveyed pharmacies in each local market. To search, you can enter your zip-code or city/county. This website helps seniors who may not reach the catastrophic level and could remain in the “donut hole.” (It’s also useful for people of any age who have no drug coverage.)
The list below contains the highest rated Medicare Part D prescription drug plans in the state of New York. 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.