As in the case of Medicare Part C plans, there are a number of Medicare Part D Plans available. Most cards appear similarly to this example card from Medco shown above, with pharmacy info only.
The Part D standard benefit, at a minimum, plan sponsors must offer a "standard benefit" package mandated by law. The standard benefit includes an annual deductible and a gap in coverage known as the "Donut Hole." Sponsors may also offer plans that differ from – but are actuarially equivalent to – the standard benefit. Finally, they may also offer "enhanced" plans that provide benefits in addition to the standard benefit. Typically, the enhanced plans offer some coverage during the Donut Hole. The Standard Benefit is defined in terms of the benefit structure, not the drugs that must be covered under the
- In 2016, the Standard Benefit includes an initial Annual Deductible of $360 (the maximum allowed under law). This is called the Deductible Phase, or Stage 1.
- After meeting the deductible the beneficiary pays 25% of the next $2,950 ($737.50) in formulary drugs. This is called the Initial Coverage Period or Stage 2.
- Once the plan and the beneficiary have together paid the Initial Coverage Limit of $3,310 the beneficiary has a gap in coverage known as the "Donut Hole," or Stage 3.
- During the Donut Hole the beneficiary pays for the next $3,752.50 in formulary drugs. On brand name drugs the member receives a 50% manufacturer discount and a 5% “subsidy” from the plan. Therefore the member’s cost will be 45%. The member’s actual 2016 cost (45%) plus the 50% manufacturer subsidy (95%), counts toward TROOP. On generic drugs the member receives a 42% subsidy from Medicare. The member’s actual out-of-pocket cost (58%) counts toward TROOP.)
- Once the beneficiary has spent a total of $4850 ($360 + $737.50 + $3752.50) in "true out-of pocket costs" (TrOOP) in formulary drugs, he/she enters the Catastrophic Coverage Period, or Stage 4.
- During Stage 4 the beneficiary pays 5% of the cost for formulary drugs, or $2.95 for generics and $7.40 for brand name drugs, whichever is greater. Beneficiaries who meet the $4,850 out-of-pocket threshold remain in Stage 4 for the rest of the calendar year. The process begins over again the next year.
Medicare does not establish premium amounts for plans. Instead, premiums are established through an annual competitive bidding process and evaluated by CMS. Medicare does establish the maximum deductible amount, the Initial Coverage Limit, the TrOOP threshold and Catastrophic Coverage levels every year. The table below shows the standard benefit each year from 2010 – 2017. This table is subject to change, and the most current version is always available at http://www.medicareadvocacy.org/medicare-info/medicare-part-d/#standard%20benefit. We’ve included this information for you convenience on our website, but recommend visiting this website for the most current information.
Due to the complexity of Medicare, the best practice is to provide all your cards to your provider, your nursing facility, and your pharmacy, and be prepared to provide them in the event of hospitalization. Make copies of them for your loved ones should they be involved in your care.
Do not be afraid to engage your plan! Medicare is your benefit, and you pay for it, or have paid for it already while part of the workforce.
If you’ve received benefits such as physician care or prescription drugs, and the provider did not have the necessary information at the point of service, you may receive an invoice for the full cost of services. These costs can usually be dealt with retroactively, however best practice is to deal with them as soon as possible!