Living with Diabetes

What Is Medicare Part D?

By now, you've probably heard about Medicare Part D, the new prescription drug program available to all Medicare beneficiaries. Under Part D, you will have a variety of coverage options to help you pay for your prescriptions. Each Part D drug plan is run by a private company, and they will all look a little different from each other but they must all meet standards set by the federal government.

Part D coverage is optional you are not required to sign up for it. If you do decide to enroll in a Medicare prescription drug plan, you will need to pay a monthly premium (separate and apart from any Part B premium you may already be paying), plus some out-of-pocket expenses for your medication.

What Does It Cover?

In addition to providing prescription drug coverage, Medicare Part D ensures coverage for supplies necessary to inject insulin, including:

• Syringes
• Needles
• Alcohol swabs
• Gauze

How Much Does It Cost?

The Standard Plan

In creating the Medicare Part D drug program, the government developed a "standard" plan. All Part D plans must meet or exceed this standard:

The "Total Yearly Drug Cost" is the total amount of money your prescription drugs cost, regardless of who is paying for them. In other words, it is the amount you would spend on your prescription drugs if you had no drug coverage at all.

As you can see in the chart, the standard plan contains a coverage gap, or "donut hole" for total yearly drug costs between $2251 and $5100. Under this plan, once you exceed $2250 in total yearly drug costs you will be responsible for paying for all of your prescriptions out-of-pocket until your total yearly drug costs reach $5100. Then, the catastrophic coverage begins, and the plan will pay 95% of your drug costs through the end of the calendar year.

Plans May Differ In Coverage

Medicare requires each plan to meet or exceed the standard benefit, but because they are private insurance plans, they may look a little different from each other. Some Part D plans will follow the standardized plan structure described above, while others will be different. This can actually be an advantage in some cases. For example, if your total drug costs each year fall into the standard plan's "donut hole", you may be able to find a different plan which will better suit your needs. However, the wide variety of Part D plan structures may make it difficult to choose the best one for you.

Late Enrollment Penalty

The open enrollment period for Medicare Part D begins November 15, 2005, and ends May 15, 2006. People who are now eligible for Medicare but do not enroll in Part D on or before May 15, 2006 will be charged a late enrollment penalty. You will be subject to a 1% penalty for each month that you delay past the May 2006 deadline. So if you wait until May 2007 to sign up, you will have to pay your base premium PLUS a 12% late enrollment penalty each month for as long as you have Medicare Part D.

Choosing a Plan

If you decide that Part D is right for you, you may need to do a little homework before enrolling in a plan. Here are some things you can do that may help you decide which plan, if any, will work best for you:

1. Do you currently have prescription drug coverage? This could be drug coverage through a Medicare Advantage plan, a Medigap plan, or perhaps retiree coverage from your last job. If so, you should receive a notice from your plan explaining what your options are. If you do not receive a notice from your current drug plan about upcoming changes in 2006, contact the plan immediately for more information. Your plan’s identification card should have a customer service number printed on it.

In many cases, you will be able to remain on your current drug plan without making any changes. Medicare considers many, but not all, prescription drug plans to be "creditable coverage." If you have "creditable coverage," then you will not be charged a late enrollment penalty if you decide to enroll in Part D after the open enrollment period expires on May 15, 2006.

If Medicare does not consider your current coverage to be "creditable coverage," you will need to decide whether to keep it and risk having to pay a late enrollment penalty later if you decide to join Part D, or to cancel it and enroll in Part D now.

2. If you think you might want to enroll in a Part D plan, start by making a list of the medications you currently take, including their names, your dosage, how much it costs each time you fill the prescription, and how often you fill the prescription.

3. Medicare will mail you the 2006 Medicare & You booklet, containing information about Part D plans available in your area. If you do not receive this booklet in October 2005, contact Medicare at 1-800-MEDICARE. You can also learn about Part D plans available online.

4. Compare Part D plans to see how well they will serve your needs. You may wish to make a little chart for yourself comparing the monthly premium, deductible, copay amount, and coinsurance percentage for all of the plans you are interested in. Make sure that the plan formularies include all of the drugs you take, and that the pharmacies you like to use are included in the plan network.