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Senior Health>Medicare Insurance>>

2010 Medicare Drug Base Benefit>>>

 

2010 Federal Medicare Standard Part D Plan
Prescription Drug Expense	Payment	Costs to Enrollee
First $310	Enrollee pays 100 percent.	$310
$310 to $2,830	Enrollee pays 25 percent; Part D pays 75 percent.	$630
$2,830 to $6,440	Enrollee in the donut hole and pays 100 percent.	$3,610
	At this point, total costs have reached $6,440 and the enrollee has paid $4,550 out-of-pocket.	$4,550

Above $6,440

Enrollee pays a nominal amount; Part D picks up approximately 95 percent.

Co-pay of $2.50 or $6.30 (or 5 percent)

The Basic Standard Part D Plan

The basic standard plan is the most commonly described plan and is the foundation of the Part D program, reflecting the minimum level of benefits that may be provided. It includes a formulary, which is the list of the drugs the plan covers. Formularies include both generic and brand-name drugs, and provide for the most commonly prescribed drugs. Following are the principle aspects of the basic stand-alone plan:

Premiums for Part D are paid monthly and vary by plan and by provider. Basic Part D premiums were originally set at an anticipated benchmark of $37 per month, but in actuality, the prescription drug providers obtained lower premiums by bidding for the first year. (Premiums, however, are expected to rise each year as the program moves into maturity.) In 2009, the monthly Part D premium averaged about $28. (CMS estimates that the average monthly premium that beneficiaries will pay for standard Part D coverage in 2010 will be $30.32)

The basic Part D plan includes an annual deductible—the amount out-of-pocket the insured must initially pay for his or her drugs. The basic plan annual deductible in 2010 is $310. (This, too, is expected to rise each year.)

Basic Part D plans include coinsurance provisions—the amount the insured pays for his or her prescription medication after the annual deductible is met. This co-insurance amount is 25 percent, payable by the insured up to a specified limit ($2,830 in 2010). Therefore, for expenses above the deductible and up to the specified limit, the Part D enrollee pays 25 percent; the plan picks up the balance.

Part D does not cover the next $ 3,610 of expenses. (The amount for 2010). The beneficiary pays 100 percent of this cost out-of-pocket. This cost is referred to as the donut hole, because at this point, the beneficiary must pay all prescription drug costs out-of-pocket, until the full out-of-pocket cost has totaled $4,550 (as of 2010). The full out-of-pocket expense the enrollee is responsible for is also called TrOOP, or true out-of-pocket costs. (TrOOP costs include the initial deductible, the co-insurance amounts, and any costs the enrollee paid while in the donut hole.)

 Once the total of an enrollee’s prescription drug costs reach a specified level (known as the catastrophic level), the plan will again pick up expenses. The catastrophic level in 2010 is $6,440. (This amount is also expected to rise each year.) At this point, the beneficiary pays 5 percent co-insurance, and Part D pays 95 percent, OR the beneficiary pays a $2.50 or $6.30 co-pay, depending on the type of drug. So, at the catastrophic level, Medicare Part D essentially covers the remainder of the annual drug costs at 95 percent or better.