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Prescription Drug Coverage: Things to Consider
To get Medicare coverage for your prescription drugs, you must choose and
join a Medicare drug plan. Regardless of how a Medicare drug plan decides to
offer this coverage, there are some key factors that may vary. Some of these
factors might be more important to you than others, depending on your situation
and drug needs. These factors are:
Premium
This is the monthly cost you pay to join a Medicare drug plan. Premiums vary by
plan.
Deductible
This is the amount you pay for your prescriptions before your plan starts to
share in the costs. Deductibles vary by plans. No plan may have a deductible
more than $250 in 2006.
Copayment/Coinsurance
This is the amount you pay for your prescriptions after you have paid the
deductible. In some plans, you pay the same copayment (a set amount) or
coinsurance (a percentage of the cost) for any prescription. In other plans,
there might be different levels or "tiers," with different costs. (For example,
you might have to pay less for generic drugs than brand names. Or, some brand
names might have a lower copayment than other brand names.) Also, in some plans
your share of the cost can increase when your prescription drug costs reach a
certain limit.
Coverage
Formulary
A list of drugs that a Medicare drug plan covers is called a formulary.
Formularies include generic drugs and brand-name drugs. Most prescription drugs
used by people with Medicare will be on a plan's formulary. The formulary must
include at least two drugs in categories and classes of most commonly prescribed
drugs to people with Medicare. This makes sure that people with different
medical conditions can get the treatment they need.
Prior Authorization
Some drugs are more expensive than others even though some less expensive drugs
work just as well. Other drugs may have more side effects, or have restrictions
on how long they can be taken. To be sure certain drugs are used correctly and
only when truly necessary, plans may require a "prior authorization." This means
before the plan will cover these prescriptions, your doctor must first contact
the plan and show there is a medically-necessary reason why you must use that
particular drug for it to be covered. Plans might have other rules like this to
ensure that your drug use is effective.
Coverage Gap
If you have high drug costs, you may consider which plans offer additional
coverage until you spend $3,600 out-of-pocket. In some plans, if your costs
reach an initial coverage limit, then you pay 100% of your prescription costs.
This is called the coverage gap. This "gap" in coverage is generally above
$2,250 in total drug costs until you spend $3,600 out-of-pocket. Some plans
might offer some coverage during the gap. Even in plans where you pay 100% of
covered drug costs after a certain limit, you would still pay less for your
prescriptions than you would without this drug coverage.
Drug plans must contract with
pharmacies in your area. Check with the plan to make sure your pharmacy or a
pharmacy in the plan is convenient to you. Also, some plans may offer a
mail-order program that will allow you to have drugs sent directly to your home.
You should consider all of your options in determining what is the most
cost-effective and convenient way to have your prescriptions filled.
Even if you don't take a lot
of prescription drugs now, you still should consider joining a drug plan in
2006. As we age, most people need prescription drugs to stay healthy. For most
people, joining now means you will pay a lower monthly premium in the future
since you may have to pay a penalty if you choose to join later. You will have
to pay this penalty as long as you have a Medicare drug plan. If you reach the
point where you have spent $3,600 out-of-pocket for drug costs during the year,
the plan will pay most of your remaining drug costs. This protection could start
even sooner in some plans.
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Medicare
Drug Benefit At-a-Glance (Calendar Year 2006)
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Prescription Drug Spending—(if you have no drug
coverage other than Medicare) |
Medicare-Approved Plan Pays |
You Pay—(if you have no drug coverage other than
Medicare) |
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$0-$250 |
$0 |
Up to $250 Deductible |
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$250-$2,250 |
75% of drug costs—
Up to $1,500 |
25% of drug costs—
Up to $500 |
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$2,250-$5,100 Coverage Gap/Donut Hole |
0% of drug costs—$0 |
100% of drug costs—
Up to $2,850 |
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Subtotal: |
Up to $1,500 |
Up to $3,600 out-of-pocket |
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Over $5,100 (Catastrophic Benefit) |
95% |
5% or
$2 copay/generic
$5 copay/brand name |
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Note: Your premium (about $32 per month/$384 per
year in 2006) is not included in what you pay as shown in the chart
above. |
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To compare your Medicare Prescription Drug Plan choices,
please call toll free number @ 800.995.7122 or
Complete
our Medicare Information Request Form. |
