Find out how prescription plans assist consumers with medication costs.
Medicare prescription plans may be offered by insurance companies or other private organizations that have Medicare approval. According to Centers for Medicare & Medicaid Services, Medicare prescription drug plans can add coverage to the original Medicare plan, Medicare medical savings account plans, some Medicare cost plans and some private Medicare plans.
There are many factors involved in choosing a Medicare prescription drug plan. A plan will usually save a person money on prescriptions but also requires the policyholder to pay the coinsurance (monthly premium), copayments and possibly a deductible. The Medicare Web site has a pharmacy plan locator that lists participating insurance companies and their costs for easy comparison. Financial assistance may be available to people with low incomes.
The Medicare prescription drug plan is covered under Medicare Part D and has been available to anyone who is eligible for Medicare since January 1, 2006. People who are receiving both Medicaid and Medicare are required to have it; otherwise it is optional. Medicare Part D requires enrollees to choose a specific prescription plan, although a plan will automatically be chosen for people who are enrolled in both Medicare and Medicaid if they do not select a plan. While all Medicare Part D Plans must meet the same general government requirements, there is considerable variation among plans on such factors as the drugs that are covered, their cost and the pharmacies that the policyholder may use.
A person is first eligible to enroll in Medicare Part D three months before and up to three months after turning 65. Each subsequent year, the enrollment period is between November 15 and December 31, and eligibility begins on January 1 of the following year. Members receive an insurance card that they use to purchase drugs under the plan from a pharmacy. Even when members are required to pay all or some of the drug costs under Medicare Part D, they will receive discounted prices by going to an in-network pharmacy.
Premiums, deductibles and copayments are three factors that should be considered when evaluating the cost of a Medicare Part D plan. As of 2009, members pay a monthly premium and have a deductible of $295 that must be met before the plan offers coverage, according to Centers for Medicare & Medicaid Services. At that point, members pay a copayment, usually 25 percent, each time they purchase a drug. Once the annual maximum benefit of $2,700 is reached, the member pays 100 percent of drug costs until reaching a total out-of-pocket expense for the year of $4,350. This second deductible is called the "coverage gap." However, once the member reaches $4,350 in out-of-pocket expenses, covered drugs only cost a copayment of 5 percent for the rest of the year. There are plans without a premium, deductible or coverage gap to make the prescription plan more affordable. Members can expect the various costs of the prescription plan to increase each year.
There are also some strategies that Medicare Part D participants can follow to help control drug costs. Generic drugs and over-the-counter drugs are frequently just as effective and cost substantially less than brand name prescription drugs. Mail-order programs can also produce substantial savings, especially when the medication is used long-term. The Medicare drug plan card also provides discounts on drugs and should be used whenever possible. Members who are struggling with drug costs during the coverage gap can explore assistance programs through their state, national and community-based charitable organizations, as well as pharmaceutical companies.
Members of Medicare Part D prescription plans with low incomes may be able to obtain financial assistance through the low-income subsidy (LIS) program. The LIS program will pay for part of the coinsurance, deductibles and copayments of the Medicare prescription plan. Some states automatically enroll qualifying Medicare Part D participants in the LIS program, while other states require the participants to actively enroll.
Applicants must live in the United States and enroll in Medicare Part A or Medicare Part B in order to qualify for the LIS program. For 2009, they may not have investments, real estate (other than the primary residence) or savings that total more than $12,510 for single applicants and $25,010 for married applicants, according to the Social Security Administration. Additionally, participants in the LIS program may not receive Supplemental Security income or Medicaid nor have their Medicare premiums paid by their state.