Medicare Part D Fact Sheet
What is Medicare Part D?
- A drug benefit insurance plan for Medicare patients
Medicare Part D is insurance intended to provide low-cost medicine for seniors on Medicare. It is a voluntary program that is administered by private companies. These companies offer plans, known as PDPs (Part D Plans), which can be national (such as the plan offered by AARP) or local, restricted to a specific geographic area. Each plan covers medicines on its formulary or list of preferred drugs. Medicare patients choose a plan based on which medicine it provides and the costs of the plan.
What is the Late Enrollment Penalty?
- 1% per month not enrolled, for life
Patients who do not enroll during a twice yearly enrollment period when they are first eligible will have to pay a penalty of 1% per month, indefinitely. This means that Medicare beneficiaries who choose not enroll in the initial enrollment period, closing on May 15, will pay 7% more for premiums, for life, if they join during the next enrollment period in November. In other words there is a 12% increase in premiums for every year that Medicare enrollees do not join Part D. The penalty does not apply to participants who have comparable coverage from another source. This includes VA , retirement health plans, and other insurance plans such as one offered by AARP but they must be certified as "credible coverage."
How Much Does it Cost?
The costs of Part D are not fixed but are scheduled to rise as can be seen in the chart below. The premiums vary depending on the private plan chosen. After spending the annual deductible, enrollees pay 25% of the cost of medicine until they have spent the main benefit limit seen in the chart below. At this point, participants are in the so-called "Donut Hole" coverage gap. In the gap, beneficiaries pay 100% of their medicine costs until they spend enough that Catastrophic coverage begins. At this point, participants pay 5% of the costs of their drugs.
| Annual increases for Part D that you pay... | |||||
| Year |
Estimated
annual premium |
Annual
deductible |
Main benefit
limit |
Catastrophic
coverage begins at |
Gap in
coverage |
| 2007 | $444 | $265* | $2,400* | $5,451* | $3,051* |
| 2008 | $492 | $300 | $2,710 | $6,158 | $3,448 |
| 2009 | $516 | $325 | $2,920 | $6,596 | $3,676 |
| 2010 | $564 | $350 | $3,170 | $7,165 | $3,995 |
| 2011 | $588 | $380 | $3,400 | $7,715 | $4,315 |
| 2012 | $648 | $410 | $3,690 | $8,360 | $4,670 |
| 2013 | $696 | $445 | $4,000 | $9,068 | $5,066 |
What if a patient cannot pay these expenses?
- The Low Income Subsidy (LIS) is available
Part D participants with annual incomes below 150% of the Federal Poverty Level (FPL) who meet certain asset limits will be eligible for the Low Income Subsidy which covers most of the out-of-pocket expenses. The assets limit makes this assistance unavailable to some seniors with modest savings. Some patient assistance programs will help individuals enrolled in Part D if they are not eligible for the Low Income Subsidy. Click HERE to see the income guidelines for the LIS.
Is there any reason that participants might not get their medicine?
- Drug denials
There are three reasons that plans are refusing to pay for medicines that are on the list of drugs that they cover.
- Prior authorization: this is a requirement that that the enrollee must get the doctor to apply to the plan for approval before this drug will be covered.
- Volume limits: This means that the plan restricts the quantity of medicine (number of pills, for example) per month regardless of the amount that's been prescribed by the doctor.
- Step therapy: This means that the plan is requiring that a less expensive drug be tried before the participant is "stepped " up to the current prescription. Seniors on Medicaid and other programs that were automatically being rolled into Part D are finding themselves on plans that do not cover their medicines.
What does a participant do about a drug denial?
- The appeal process
If a Medicare Part D plan won't pay for the medicine, there is a complex appeal process that has five levels and requires the active involvement of the physician. The first step is to ask the pharmacist why the plan won't pay. The next step is to a call the doctor who may be able to help by switching the patient to a medicine that is covered by the plan. A call from the doctor to the Part D plan explaining why this specific medicine is needed may help. If this doesn't work the patient will have to file a formal appeal. Patients can pay for the medicine if they can afford it and if they win the appeal they will be reimbursed. Patients should keep a record of everything including proof of the cost. Click HERE to view the more about this process.
What about patient assistance programs and Part D?
- Drug companies are making a variety of decisions about PAPs and Part D
In 2006, the Office of the Inspector General of the Department of Health and Human Services gave the opinion that it might be illegal for drug companies to offer patient assistance programs to people on Medicare since they were now eligible for the Medicare Part D drug plans. Many drug companies announced they would not consider Medicare patients to be eligible for their PAPs. Some companies discontinued PAPs. In May, the same office said that there were no legal barriers to Medicare participants, even those enrolled in a Part D drug plan, being offered assistance through PAPs. Some drug companies have now made the decision to make Medicare patients eligible for their programs, others will accept even those enrolled in Part D, and still other companies are continuing to exclude all Medicare patients. Some companies will provide medicine if it is not provided by the applicant's Part D drug plan and others require that applicants apply for, and be turned down by the Low Income Subsidy. All this means that Medicare participants should contact the Patient Assistance Program directly to get the most up-to-date information on the company's Medicare guidelines.
Is there somewhere to get help with this program?
- Yes
Every state has a program that provides free counseling to seniors about insurance including the Medicare Part D drug programs. These agencies, known as SHIPs or SHIIPs (State Health Insurance Assistance Programs or Senior Health Insurance Information Programs), provide free, unbiased information and assistance. Click HERE to find your SHIIP. In some states these programs go by other names but they all provide, one-on-one or over-the-phone assistance with Medicare problems including Part D.
The following sites are useful resources:
www.medicarerights.org/medicareanswersonline.html This website for the Medicare Rights Center includes clearly written basic information on Medicare including how to choose a plan and information on Part D.
www.eldercare.gov/Eldercare/Public/Home.asp The Eldercare Locator is a public service of the U.S. Administration on Aging. The site connects older people and caregivers with information on senior services including Medicare. A few clicks will usually bring up phone numbers for local groups that can help answer questions.