More than 1,000 different Part D drug plans were available in 2011.
Medicare comes in four parts, labeled A, B, C and D. Parts A and B are original Medicare and cover inpatient and outpatient hospital services, home health, hospice care and preventive services such as health screenings. Part C is Medicare Advantage, which lets beneficiaries buy their A and B benefits from a private company along with extras, such as vision or dental. Part D was created by the Medicare Modernization Act of 2003 and provides coverage for prescription drugs only. Though Part D sounds straightforward, it comes with a number of rules and conditions.
Types of Part D Plans
There are two basic ways Medicare users can get Part D coverage. The first is through a Medicare Advantage plan. Many MA policies offer prescription drug coverage as an additional benefit. If you get dug coverage through MA, you do not have to purchase a separate Part D plan. You can also buy Part D as a standalone plan. Since Part D standalone plans are sold by private companies, the exact stipulations for buying them can vary. In general, however, you must already be enrolled in either Medicare Part A or Part B before you can sign up for Part D. Medicare Advantage plans require that you already have both Part A and Part B.
Enrollment
Anyone who is eligible for Medicare, regardless of age, can also sign up for Part D. Part D is not mandatory, however, and you will not be enrolled automatically. Seniors can sign up for Part D at the same time they first become eligible for Medicare, during the seven-month initial enrollment period, which lasts from three months before your 65th birthday, the month of your birthday and for three months after your birthday. People younger than 65 who can get Medicare because of a disability can sign up for Part D during the three months before the 25th month you receive disability payment until three months after. You do not have to join during your initial enrollment period, but if you change your mind later and want to enroll, you will pay a late enrollment penalty.
Medications
Not all Part D plans offer benefits for the same medications. Part D plans usually pay for certain kinds of medications only, and may charge you more if you purchase name brands as opposed to generics. The exact rules depend on which Part D policy you buy and from which company. If you already know which medications you need, Medicare.gov has a plan finder that can help you find all the policies in your area that will cover your prescriptions and how much they will cost.
The Doughnut Hole
While Part D helps users with prescription drug costs, it also comes with a significant gap period. This is often referred to as the Part D doughnut hole. Part D has an initial coverage limit for drugs. After your prescriptions reach a certain retail cost limit, Part D coverage stops and users pay all the costs for prescriptions themselves. After the cost of medication reaches a catastrophic coverage level, benefits pick up again. As of 2011, Part D reforms go into place to help fill the doughnut hole. Part D users get a 50 percent discount on name-brand drugs and a 7 percent discount on generic drugs while their coverage is in the hole. Annual deductibles, co-payments and coinsurance now count toward your out-of-pocket costs as well, which makes the gap between initial coverage and catastrophic coverage smaller.
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