Medicare Part D - Costs
Following is an overview of Medicare Part D costs, as of January 1, 2007. For more specific details about your costs, talk to your prescription drug plan provider, or ask your Health Mart pharmacist for assistance with determining your monthly Part D costs.
The Standard Part D Benefit
- Monthly Premium:
For 2007, the average premium for standard drug coverage under Medicare Part D is about $24. However, this amount varies according to the Part D plan you select – some charge more, some charge less. Each person must pay a premium as an individual; there are no discounts for married couples. You will pay the Part D premium in addition to your monthly premium for Medicare Part B. The Part D premium can be paid directly to the provider of the drug plan, or you can have it taken out of your Social Security check.
- Annual Deductible:
This is the amount you must pay for prescription drugs before your Part D insurance begins to pay. (You start working toward your deductible at the start of every calendar year. Keep in mind that the amount can change each year.) The 2007 deductible for Medicare Part D is not to exceed $265; some plans may have a lower limit.
- Initial Coverage:
In 2007, if you are enrolled in Part D, you will pay a $265 deductible toward the cost of your drugs. After that is met, the plan will cover 75% of the next $2,400 of your drug costs. (i.e., the Part D plan pays $1,600 of this amount, and you pay $535). By this time, you will have paid a total of $800 – your $265 deductible, plus $535.
There is a gap in Medicare's coverage (also referred to as the "donut hole"), which occurs after you meet the coverage limit described above (see Initial Coverage). In other words, the way Part D is structured currently, you may need to pay an additional $3,050 in out-of-pocket costs before your Medicare coverage kicks in again. The Part D plan pays nothing toward your drug costs during the “donut hole” phase. However, there are some ways to manage through the coverage gap:
If you have extra coverage from a state program or some other type of assistance that adds to your Medicare coverage, this could reduce or eliminate the “donut hole.”
Some drug plans may offer extra coverage; however, you will probably need to pay a higher premium.
If you have limited income and qualify for the “Extra Help” program from the Social Security Administration (SSA), you will not be affected by the coverage gap.
Read the advice provided in "5 Ways to Lower Your Costs During the Coverage Gap" on Medicare’s website.
In the event your drug expenses exceed the coverage gap (outlined above), the Medicare Part D plan will cover up to 95% of your prescription costs for the remainder of the calendar year. There is no limit to this coverage in any one year. Under the standard Part D drug benefit for 2007, catastrophic coverage begins after you've spent $3,850 on drugs out-of-pocket over the course of the year, not including premiums. ($265 deductible + $535 in co-payments + $3,050 in the coverage gap = $3,850.)
You can enroll in Medicare Part D when you first become eligible for Medicare (three months before the month you turn age 65 until three months after you turn age 65). However, if you don’t enroll when you become eligible for the Part D benefit, but decide to join later, you may be subject to a penalty which is tacked on to your monthly Part D premium – and which you will to continue to pay for as long as you have that coverage.
But if you choose not to enroll in Part D because you have prescription drug coverage with a union or employer, and later, they stop offering that coverage, you won’t have to pay a penalty if you join a Medicare Part D drug plan before going 63 days without coverage. If the coverage you had was not considered “creditable,” meaning it wasn’t as good as the Part D drug benefit, talk with your benefits administrator about your options.