Part D
Part D, Prescription or PDP Plans
When a Medicare beneficiary selects a Medicare Supplement or an MA that does not include drug coverage, then that beneficiary needs a PDP plan.
There are penalties to beneficiaries for not obtaining drug coverage when they become eligible for it, unless they have credible coverage actuarially equivalent to Medicare Part D.
Always check the current prescriptions to determine the best plan. In some instances, assisting with formulary exception requests, or requesting aid from the drug manufacturer may be advisable.
NOTE: If a Medicare beneficiary has an MA or MAPD plan in place, enrolling in a stand-alone PDP plan will cause disenrollment from the prior plan. Be certain before moving forward with enrollment!
Part D plans must cover at least the Part D standard benefit or its actuarial equivalent.
For 2013, the standard benefit requires the beneficiary to pay:
$325 deductible
25% of prescription drug costs between $325 and $2,970 = $661.25
Part of the costs in the “Coverage Gap” – After total spending on drugs by the beneficiary and the plan reaches $2,970 the beneficiary pays for 79% of generic drug costs and 50% of brand name drug costs.
Drug manufacturers provide a 50% discount on brand name drug costs.
A new law enacted in 2010 eliminates the coverage gap by 2020 by reducing the amount beneficiaries pay while in the coverage gap “Doughnut Hole” by a small percentage each year until 2020 when they will be responsible for only 25% of brand and generic drug costs.
Catastrophic coverage: Once beneficiary expenditures (including drug manufacturer discounts) reach a total of $4,750, the beneficiary is through the coverage gap and reaches catastrophic coverage. On any future prescriptions the beneficiary pays either a co-pay of $2.65 for generic drugs or $6.60 for brand name drugs or a co-insurance of 5%, whichever is greater.
PHASING OUT OF THE DOUGHNUT HOLE
The final health care reform package closes the Part D “doughnut hole”— the gap in drug coverage during which people with Medicare must pay the full cost of their prescriptions out of pocket. All consumers who reach this coverage gap in 2010 will receive a $250 rebate. Health care reform phases out the doughnut hole by decreasing the consumer’s share of drug costs during the doughnut hole until it reaches 25 percent in 2020 for both brand-name and generic drugs. However, the phase-out works differently for brand-name and generic drugs. The charts below illustrate how much the consumer will pay during the doughnut hole for both brand-name and generic drugs through 2020, when the phase-out will be complete.
PHASE-OUT OF THE DOUGHNUT HOLE FOR BRAND-NAME DRUGS
| Year | PharmaceuticalManufacturer
Discount |
GovernmentSubsidy (paid
through plans) |
ConsumerResponsibility |
| 2010 | 0 | 0 | 100% less the $250rebate for brand name
and generic drugs |
| 2011 | 50% | 0 | 50% |
| 2012 | 50% | 0 | 50% |
| 2013 | 50% | 2.5% | 47.5% |
| 2014 | 50% | 2.5% | 47.5% |
| 2015 | 50% | 5% | 45% |
| 2016 | 50% | 5% | 45% |
| 2017 | 50% | 10% | 40% |
| 2018 | 50% | 15% | 35% |
| 2019 | 50% | 20% | 30% |
| 2020 | 50% | 25% | 25% |
PHASE-OUT OF THE DOUGHNUT HOLE FOR GENERIC DRUGS
| Year | Government Subsidy(paid through plans) | Consumer Responsibility |
| 2010 | 0 |
100% less the $250 rebate for brand name and generic |
| 2011 | 7% | 93% |
| 2012 | 14% | 86% |
| 2013 | 21% | 79% |
| 2014 | 28% | 72% |
| 2015 | 35% | 65% |
| 2016 | 42% | 58% |
| 2017 | 49% | 51% |
| 2018 | 56% | 44% |
| 2019 | 63% | 37% |
| 2020 | 75% | 25% |
VIP Medicare 