Prescription Drug Plan (PDP) – This is a separate, stand-alone insurance that you can buy in addition to Original Medicare or Medicare Supplement insurance.
- Medicare Advantage Plan – with Medicare Advantage plans you get your Part A, Part B, & most offer the Prescription Drug Plan (Part D).
By law, Part D plans all must offer at least the basic benefits required by Medicare. Plans can offer more benefits, but must meet the following minimum requirements:
For 2014, the standard benefit requires the beneficiary to pay:
- $310 deductible
- 25% of prescription drug costs between $310 and $2,970 = $665
- Part of the costs in the “Coverage Gap” (also known as the donut hole) – After total spending on drugs by the beneficiary and the plan reaches $2,850 ($2,970 in 2013) the beneficiary pays for 72% of generic drug costs and 47.5% of brand name brand drug costs (undiscounted).
→ Drug manufacturers provide a 50% discount on brand name drug costs.
→ In 2010 a new law was enacted that will eliminate the coverage gap by 2020. This will be done by reducing the amount beneficiaries pay while in the coverage gap (also known as the doughnut hole) by a small percentage each year until 2020 when they will be responsible for only 25% of brand and generic drug costs.
- Nominal costs under catastrophic coverage: Once the beneficiary expenditures (including drug manufacturer discounts) reach a total of $4,550 ($4,750 in 2013), the beneficiary is through the coverage gap and reaches catastrophic level coverage. On any future prescriptions the beneficiary pays either a co-pay of $2.55 for generic drugs or $6.35 for brand name drugs or a co-insurance of 5%, whichever is greater.
The Medicare Part D benefits must be at least as good as the standard coverage. Some Part D plans have enhanced coverage for an additional monthly premium. Some Part D plans will have no deductibles as well.
For more information and to shop Medicare Part D plans visit Part D Medicare at www.partDmedicare.com.