What You Should Know About Medicare Part D

Beginning in 2003, Medicare Part D, the section of Medicare specifically designed to help supplement the cost of self-administered prescriptions, is a complicated system. You enroll in it through private insurers by adding it onto your existing Medicare plan.

The two sections of Medicare Part D work in tandem to help you pay for your prescriptions up to 3,820 dollars: standard coverage, and “catastrophic coverage.” This is the amount that Medicare pays for after you reach a threshold in out of pocket expenses. That amount, as part of Part D’s original design, is 5,100 dollars.

The difference between those two amounts is Medicare Part D’s fatal flaw, what people refer to is the “donut hole,” wherein there is a coverage gap that you would be completely responsible for financially. That would be 1,280 dollars in out of pocket expenses, even with Medicare Part D.

But there might be a way around this, and it involves the Affordable Care Act, or what is commonly referred to as Obamacare.

Over the last nine years, the ACA has slowly gotten rid of that insurance gap, first by limiting what companies that manufacture these prescription drugs can charge, making the part you’d be responsible for much lower. As of last year, that was 44 percent on generic drugs, and 35 percent on the brand names. And as of this year, that gap is now totally gone. Now, you’d be liable for only 25 percent, as a copay, until the catastrophic coverage begins.

With brand name drugs, you are responsible for all costs up until you hit 415 dollars. That is the deductible, and once reached Medicare kicks. Then you are in the 25 percent copay range on brand name drugs. Then, as per the coverage outlined, a discount of 70 percent will be applied to the drug via the company that makes it, with your insurance then covering 5 percent of that amount. When you hit the catastrophic coverage amount of 5100 dollars, your copay is then reduced to only 5 percent yourself, with your insurance paying 15 percent, and Medicare covering the other 80 percent.

The generic drug plan functions much the same way as the brand name drug plan, except during the gap. Currently, you’ll be responsible for 37 percent of the cost, instead of 25 percent. The insurer pays nothing, and the drug companies reduce their cost by 63 percent, with that amount not part of the 5,100 dollar limit that would count as catastrophic coverage. This will change in 2020 when generic drugs may fall in line with the brand name drug plan, as outlined in the previous paragraph.

But still, even with the bulk of the costs of drugs being taken on by Medicare Part D, people still often struggle to keep up with their drug prices.

With the 37 percent deductible on the generic drug plan, you could still end up spending several thousand dollars annually, especially since the out of pocket on generic drugs do not count towards the catastrophic coverage limit. But even then, once the catastrophic coverage limit is met, people enrolled in Medicare are still liable for 5 percent of costs indefinitely, and that could really add up depending on the drugs needed. Added to this, the repeated attack on the Affordable Care Act from Senators and other lawmakers. Were the Affordable Care Act be eliminated, that gap in coverage would open up like it was prior to the ACA’s implementation.

So while Medicare can certainly help you the drugs you need at an affordable rate, it is not a totally clean solution, and the parameters of it are constantly shifting. Your best bet is to check regularly to keep up with any changes that new laws may have made to your coverage.