Each U.S. state sells around 30 different Part D plans in 2011.
Medicare was made up of two parts when it was created in 1965. Part A covered inpatient hospital benefits, and Part B mainly covered outpatient hospital care and preventive services. Later, Medicare added two more parts, C, usually called Medicare Advantage, and D. Medicare Advantage lets beneficiaries get their Parts A and B benefits from private companies, while Part D covers prescription drugs. Part D can be bought either as a stand-alone plan or as part of Medicare Advantage.
Enrollment
You must join a Part D when you first become eligible for Medicare. If you do not, and you had no other drug coverage, you will be responsible for paying a late-enrollment penalty later. The late-enrollment penalty will be added to your Part D monthly premiums.
Service Area
Part D plans, like Medicare Advantage, are sold by service area, usually by county. You may not be able to find the same Part D plans offered across service areas, although some of the larger insurance companies do sell the same Part D policies throughout a single state. You might also be able to find the same plan sold under different names in different areas. Nevertheless, if you move from one country to another, or one state to another, it is likely you will have to switch Part D plans.
Benefits
Not all Part D plans cover all drugs. The exact drugs covered, at what amount and whether you get benefits for both generic and brand-name medications differ by plan and company. Many Part D insurance companies sell their plans in "tiers." The cheapest tier has the least coverage for the fewest drugs, generally generics only, while higher tiers cover brand names at higher percentages. Medicare.gov offers a national Part D plan finder, which allows users to search for plans that will cover their medications.
Deductibles
Part D plans generally come with an annual deductible. Deductibles are what users must pay before insurance begins offering benefits. Part D benefits you get through Medicare Advantage may not have a separate deductible, but stand-alone Part D plans almost always do. In 2011, companies cannot set a Part D deductible higher than $310, but this amount can change yearly. Some Part D plans have lower or no deductibles in exchange for higher premiums, copayments or coinsurance costs.
Doughnut Hole
One of the most confusing features of Medicare Part D is what is often called the "doughnut hole." After you meet your deductible, you pay only a portion of the Medicare-approved amount for medications, while Part D insurance pays the rest. However, after your drug costs total up to more than your initial coverage limit, you must pay all costs yourself until you meet the catastrophic coverage level. You must still pay monthly premiums to keep your insurance during this time. In 2011, reforms meant to help close the hole went into effect. Beneficiaries immediately began receiving discounts on both generic and name-brand drugs while in the hole. Additional discounts are to be rolled out every year until 2020, when users only pay 25 percent of drug costs while in the hole.
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