U.S. companies offered 1,007 Part D plans in 2011.
When Medicare was originally created in 1965, it contained only two parts: A and B. These parts offered senior citizens affordable medical insurance to help cover inpatient and outpatient hospital care, home health care, hospice services and preventive care. Later, Parts C and D were added. Part D became law through the Medicare Modernization Act of 2003, which was meant to improve the health of Medicare beneficiaries by subsidizing the costs of prescription medications.
Choice
One of the results of Medicare Part D is that users now have a choice in how they receive their Medicare benefits. Although you can buy Part A and B benefits from either the federal government or private insurance companies, Part D is only available through private companies. However, you can choose whatever company and Part D plan you want. You can also decide whether you want to get your Part D benefits in a Part C --- Medicare Advantage --- plan or purchase a stand-alone Part D plan.
Costs
Different kinds of Part D plans have different monthly premiums, depending on what drugs they cover and whether or not they have gap coverage for the hole that often accompanies Part D coverage. Part D may also have its own deductibles. Certain Medicare Advantage plans come with prescription medication benefits and have no annual deductible, although monthly premiums and other costs are higher. However, most kinds of MA plans and stand-alone Part D policies do have deductibles. The amount of your annual deductible also depends on which company you buy your policy from and what kinds of drugs it covers. Your Part D plan also requires co-payments for each prescription.
Benefits
The most important outcome of Part D Medicare are the insurance benefits. Certain plans only cover certain drugs, while others cover almost all of them. The Medicare plan finder featured at the Medicare.gov website allows you to add the medications you need to its search feature so that you get a list of all plans sold in your area that cover them.
Doughnut Hole
One unfortunate outcome of having Part D Medicare is the notorious "doughnut hole" --- a gap in coverage that happens once you reach your initial coverage limit. The initial coverage limit may vary slightly by plan, but in 2011, the average amount was $2,800. After the total cost of your prescription drugs reaches this level, Part D benefits completely stop and you must pay all medication charges yourself. When your spending reaches the catastrophic threshold, generally around $4,500, benefits begin again and you're responsible only for a co-pay. Beginning in 2011, users who are "in the hole" receive 50 percent off of brand-name drugs and 7 percent off of generic drugs. By 2020, the hole will be closed and users will only pay 25 percent of all drugs until they reach their annual out-of-pocket limit.
Tags: Part benefits, Part Medicare, Part plan, annual deductible, coverage limit
