Medicare Prescription Medicine Benefit Part D – an Overview

For the first time since Congress created Medicare in 1966, the Medicare program will pay for prescription medicine. The new program begins January 1, 2006. Everyone with Medicare must make a decision about their prescription medicine coverage – even if they want to keep their current prescription medicine coverage.

Private insurance companies, such as Blue Cross of California, Blue Shield of California, and Humana will offer the Medicare Part D prescription medicine plans. Unlike Medicare Parts A and B, private vendors will sell Part D plans.

Each Part D, Medicare Prescription medicine plan must offer minimum benefits. A good resource for people considering Part D options is the publication “Medicare and You, 2006” published by the Centers for Medicare and Medicaid

The standard or base Medicare Part D plan benefits include:

• The member pays the first $250 per calendar year for prescription medicine (deductible);
• After paying the deductible, the member pays 25 percent for prescription drugs for the next $2,000 of prescription medicine during the year;
• After the member has paid the $250 deductible and 25 percent of the next $2,000 ($500 = $2,000 x .25,) the member pays 100 percent of prescription medicine costs for the next $2,850;
• Once a member has paid a total of $3,600 ($250 deductible + $500 (25% copayment) + $2850 = $3,600) per calendar year in out of pocket for prescription medicine the plan will pay 95 percent of the cost of prescriptions and the member pays 5 percent.

Many of the private Part D prescription medicine benefit plans pay for some of the member costs, such as the $250 deductible, the 25 percent and perhaps generic medicine during the $2,850 “donut hole” of no coverage.

A person must evaluate his or her personal prescription benefit needs and either select a new prescription plan, stay on his or her current plan or not select any prescription medicine benefit. Note that the Medicare Advantage plans (senior HMOs such as Secure Horizons, presented by Pacificare of California) usually contain prescription medicine at low or no cost. We will discuss some of the specific Medicare Part D plans is detail in other articles.

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