What Is the Medicare Part D Plan?

In 2006, the federal government began Medicare Part D primarily to provide financial assistance to seniors for prescription drugs. The government subsidizes certain drugs for program participants, who can enroll through a variety of plans. There are many plans available. Plans vary by state, and each plan has its own set of rules concerning generic and name brand drugs, monthly premiums, deductibles and co-pays.

Basics

Medicare is offered to people at least 65 years old. Medicare Part D is not a mandatory program, but it is available to Medicare recipients. The government’s goal is to minimize out-of-pocket expenses. The Medicare Part D coverage refers to participants who pay for their drugs on their own. Most plans assist participants with paying prescription costs up to $2,000 per year. Anything over $2,000 is paid by the participant and not the Medicare Part D program,unless drug costs exceed $5,000 annually–in which case Medicare pays. This is the so-called Medicare gap.

Subsidy

Although Medicare recipients can enroll in a Part D Plan, their income and financial resources will impact the extent of their subsidy. While most plans have a sliding scale that establishes different fees, people with very low incomes might be eligible for a complete subsidy, meaning they will not pay any annual premiums or co-pays. For additional information, contact the Department of Health and Human Services at 1-800-MEDICARE or 1-800-633-4227.

Exclusions

All drugs do not qualify under Medicare Part D. The federal government informs all states of drugs that can be excluded, and the states then make final determinations. For example, nonprescription or over-the-counter drugs might not be subsidized. Prescriptions for vitamins and mineral products, such as iron, zinc and Vitamin D also can be excluded.

Plans

There are two to participate in the Medicare Part D program. Participants select either a Prescription Drug Plan or Medicare Advantage Plan. The main difference is that PDPs only cover prescription drugs; whereas Medicare Advantage Plans include both drugs and medical treatment.

Considerations

Medicare Part D Plans are not permanent or fixed rates. In 2009, the PDP monthly premium was expected to average $45, though in 2006, the premium was around $37. About half of PDPs charge deductibles, which for 2009 were expected to be about $300.