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Part D Drug Plans

What is Part D?

Medicare Part D is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries in the United States. The Medicare Prescription Drug program (Part D) was created through the Improvement and Modernization Act of 2003 (also known as the MMA).In 2015, there are currently 31 drug plans in California offering plans with monthly premiums ranging between $15.70 to $145.70. Most California Seniors have a difficult time understanding what a Part D plan is and which one they should choose. If you have a medicare supplement it’s a wise decision to have a Medicare Prescription Drug Plan (PDP). PDP’s are designed to supplement Medicare Parts A&B and will greatly reduce the cost of medicines you take. If you should decide not to sign up for Part D keep in mind that you can be charged a Late Assessment Penalty (LEP). This penalty is calculated by the number of months that you were without credible coverage, multiplied by 1% of the national average premium of a Part D drug plan (.32 per month for 2010). 

2015 Part D Benefit Design

  • Phase 1    
    • Annual Deductible of $320. You pay 100% until deductible is met. (Some Part D plans waive the deductible)
  • Phase 2    
    • Initial Coverage - You pay 25% and your Part D plan pays 75% until you meet the Initial Coverage Limit. (2,960 for 2015)
  • Phase 3    
    • Coverage Gap (donut hole) is reached when your total drug costs reach $2,960. Your cost sharing is now 45% for covered brand name and 65% for covered Generics.
  • Phase 4    
    • Catastrophic Coverage - reached when you reach the out-of-pocket threshold of $4,700 (2015). Your cost sharing is the greater of 5% of the covered drug cost, or $2.65 for covered Generic and $6.60 for covered Brand name.

Drug Formularies

Medicare drug plans cover both generic and brand-name drugs. Each plan has a list of drugs it covers, called a formulary. This list must always meet Medicare’s minimum requirements (for example, plans are required to include at least 2 drug options in each drug category), but it is not required to include all prescription drugs (see Covered Drugs). In certain circumstances, Part D plans may change their formularies during the year.

For more information see #4 in this Article 

Covered Drugs

Medicare Prescription Drug Plans (PDP’s) and Medicare Advantage Prescription Drug Plans (MA-PD’s), are required to cover drugs in all 6 categories:

  1. Antidepressant medications
  2. Antipsychotic drug medications
  3. Anticonvulsant medications
  4. Antineoplastic drugs (used by cancer patients)
  5. Immunosuppressant (used by transplant patients)
  6. Antiretroviral (used by patients with HIV).