medicare part d

Medicare Part D coverage is Medicare's version of a prescription drug plan. It was implemented in 2006 after being passed into law earlier in the decade. Anyone who is covered by Medicare Part A or Part B can enroll in Medicare Part D, and it can be done in two ways: Through a private insurer who offers the Medicare Part D package, or by enrolling in a Medicare Advantage plan that covers both medical and pharmacy benefits. Some seniors, such as many of those requiring daily nursing care, are eligible for both Medicare and Medicaid. In this case, they are considered a "dual-eligible" and become part of the Medicare Part D plan instead of being covered by Medicaid's pharmacy coverage.

There is a cost to beneficiaries for Medicare Part D coverage, roughly $40 a month on average. With over 1,500 providers of Medicare Part D coverage, there is an opportunity to shop around. All companies offering Part D coverage must offer the exact same benefit with access to the exact same Part D formulary.

The Medicare Part D Coverage covers a number of drugs as defined in Medicare's drug formulary. Both brand name and generics are covered, but the member may be responsible for a different copay on each. The formulary mirrors that of the VA's benefit system, which covers most drugs used for medical purposes, although a common criticism is that it still only covers a fraction (15 - 40%) of all the drugs approved in the 90's and 00's. Like many private health plans, Medicare Part D coverage does not provide benefits for drugs that treat things many cosmetic or lifestyle drugs, or over-the-counter pain relievers or cough medicine. This is consistent with other government-regulated benefits -- for example, these types of drugs are also not considered part of the list of covered Flexible Spending Account expenses either.

While the cost of Medicare Part D to the enrollee can vary, it averages around $40 per member per month. In addition, the program has a deductible that changes from year to year, currently just above $300, and requires a 25% copay for drugs up to the $2,840 mark. The coverage then hits the "donut hole", and covers 95% of the drug expense above the $4,550 mark. In past years, the donut hole has been a topic of much debate, causing seniors to incur major expenses as their drug costs increase throughout the years. It was addressed by the health reform law.

In addition to the cost to enrollees, it is estimated that the Medicare Part D coverage program costs the U.S. over $50 billion per year, due to the fact that the average Medicare Part D premiums fall short of coveraging the average benefit paid to benificiaries. In that sense, Medicare Part D is more of a government benefit than a risk-sharing insurance pool.

One of the criticisms of Medicare Part D was that it was introduced with a coverage gap in its benefit design, known as the Medicare donut hole . The 2010 health reform law took steps to reduce the infamous Medicare Part D donut hole. While 2011 is the first year that the benefit design changes to help alleviate the donut hole, it will not be fully phased out until 2020. Beginning in 2011, seniors can receive a discount on drugs purchased while they are in the Medicare Part D donut hole (defined this year as $2,840 to $4,550). While in that spending range, enrollees can receive a discount of 7% on generic drugs and 50% on brand name drugs. The discounted amount is added back in when calculating the progress toward the $4,550 mark, at which time benefits are covered at 95%.