Medicare Part D

Medicare Part D (Prescription Drug Coverage) must be offered to everyone with Medicare.  There are two ways to choose Medicare Part D.

  1. Prescription Drug Plan (PDP) – This is a separate, stand-alone insurance that you can buy in addition to Original Medicare or Medicare Supplement insurance.
  2. Medicare Advantage Plan – with Medicare Advantage plans you get your Part A, Part B, & most offer the Prescription Drug Plan (Part D).

By law, Part D plans all must offer at least the basic benefits required by Medicare.  Plans can offer more benefits, but must meet the following minimum requirements:

Basic Benefit Required by Medicare
2015
Deductible $320.00
Initial Coverage Limit* $2,960.00
Out-of-Pocket Threshold** $4,700.00
    *
After an individual pays the deductible, he or she is in the initial coverage period during which he or she pays 25 percent of drug costs and the Part D plan pays 75 percent of costs. Once Part D drug expenses (paid by the individual and by the Part D plan) total the initial coverage limit ($2,960 for 2015), the individual is responsible for a certain percentage of charges based on whether the drug is generic or brand until the individual has reached the out-of-pocket threshold.
  **
The out-of-pocket threshold is the amount that the individual must pay on his or her own before catastrophic coverage begins. This gap between the initial coverage limit and catastrophic coverage is referred to as the “donut hole.”
***
Once an individual reaches the catastrophic portion of the benefit, the Part D plan covers approximately 95 percent of the Part D drug expenses incurred. Cost-sharing is set at the greater of 5 percent coinsurance or fixed copayments (see below). This amount is set by CMS. It is not a total of other amounts listed in this table.
Copayments in Catastrophic Coverage Portion of Benefit
2014 2015
Generic/Preferred Multi-Source Drug* $2.55 $2.65
Other Drug $6.35 $6.60
    *
For Part D plans that charge copayments in the catastrophic portion of the benefit (instead of 5 percent coinsurance), the amount of the copayment for a generic drug or for a preferred multiple source drug (i.e., generally one for which there are two or more products that are therapeutically and pharmaceutically equivalent) is set at a lower amount than the amount for any other drug.

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