Insurance

Prescription Drug Coverage under Medicare

Prescription drug coverage under Medicare has been changed in recent years. Medicare Part D was created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. It was implemented in 2006. Part D provides an optional prescription drug benefit.

What Is Medicare Part D?

Medicare Part D is a voluntary program providing prescription drug benefits. Beneficiaries can enroll in a stand-alone drug plan or private health plan that offers drug coverage. These plans are administered by private companies, not the government, and beneficiaries pay a deductible, coinsurance and a monthly premium.

Coverage

The primary prescription drug benefit went into effect in 2006. Since then, all Medicare beneficiaries have had access to an optional prescription drug benefit. This benefit covers 75% of costs up to $2,250 per year.

Cost of Coverage

Beneficiaries of the optional prescription drug benefit must pay a deductible of $250 and premiums of about $35 per month, as well as the remaining 25% of the cost of the drug. There is a gap in coverage once a beneficiary hits the $2,250 cap until an out-of-pocket limit of $3,600 is met (not including premium). At that point, the beneficiary is responsible only for the greater of:

  • A copayment of $2 for a generic drug and $5 for any other drug or
  • 5% coinsurance

Questions for Your Attorney

  • Am I required by law to sign up for Medicare Part D?
  • How much coverage do I get under Medicare Part D?
  • How much does Medicare Part D cost?
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