A Medicare Prescription Drug Primer, Part 1: Coverage Basics

Based on the “Medicare.gov - MPDPF: Supporting Information” and “Prescription Drug Coverage: Basic Information” webpages on the Medicare website

Edited (with Introduction) by Dr. Don Rose, Writer, Life Alert

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Now that the 2007 active enrollment period for the Medicare Prescription Drug Benefit is here (the active period runs November 15 to December 31, 2006), we thought an overview article covering the basic concepts involved in choosing a plan would be useful. Such a primer follows below. We urge all seniors to gather information that can assist in their decision making, whether they are contemplating a plan change or deciding on a plan for the first time.(Below is part 1 of our two part article.) --Dr. Don Rose

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What is Medicare Prescription Drug Coverage?

Medicare prescription drug coverage is insurance that covers both brand-name and generic prescription drugs at participating pharmacies in your area. Medicare prescription drug coverage provides protection for people who have very high drug costs. This coverage may help lower prescription drug costs and help protect against higher costs in the future. It can give you greater access to drugs that you can use to prevent complications of diseases and stay well.

Medicare offers prescription drug coverage for everyone with Medicare. This coverage is called “Part D.” If you join a Medicare drug plan, you pay a monthly premium.

Part D is optional. If you decide not to enroll in a Medicare drug plan when you are first eligible, you may have to pay a penalty if you choose to join later.

There are two ways to get Medicare prescription drug coverage:

1. Join a Medicare Prescription Drug Plan that adds coverage to

• the Original Medicare Plan,
• some Medicare Private Fee-for Service Plans,
• some Medicare Cost Plans, and
• Medicare Medical Savings Account Plans.

2. Join a Medicare Health Plan (like an HMO or PPO) that includes prescription drug coverage that is a part of the plan. You get all of your Medicare health care including prescription drug coverage through these plans.

Read Quick Facts about Medicare's New Coverage for Prescription Drugs

Who can get Medicare prescription drug coverage?

Everyone with Medicare is eligible for this coverage, regardless of income and resources, health status, or current prescription expenses.

How does Medicare prescription drug coverage work?

Your decision about Medicare prescription drug coverage depends on the kind of health care coverage you have now. There are different ways to get Medicare prescription drug coverage. You can join a Medicare prescription drug plan, or you can join a Medicare Advantage Plan or other Medicare Health Plan that offers drug coverage. Whichever plan you choose, Medicare drug coverage will help you by covering brand-name and generic drugs at pharmacies that are convenient for you.

Like other insurance, if you join, generally you will pay a monthly premium, which varies by plan, and a yearly deductible (between $0-$265 in 2007). You will also pay a part of the cost of your prescriptions, including a copayment or coinsurance. Costs will vary depending on which drug plan you choose. Some plans may offer more coverage and additional drugs for a higher monthly premium.

If you have limited income and resources, and you qualify for extra help, you may not have to pay a premium or deductible. You can apply or get more information about the extra help by calling Social Security at 1-800-772-1213 (TTY 1-800-325-0778) or visiting www.socialsecurity.gov .

What are Medicare Prescription Drug Plans?

Medicare Prescription Drug Plans are offered by insurance companies and other private companies approved by Medicare. They add coverage to:

• The Original Medicare Plan,
• Some Medicare Cost Plans,
• Some Medicare Private Fee-for-Service Plans, and
• Medicare Medical Savings Account Plans.

With a Medicare Prescription Drug Plan:

• Generally, you pay less for your prescriptions
• You will get a plan member card after you enroll. You use this card when you get your prescriptions filled
• You will pay the copayment, coinsurance, and/or deductible, if any.

If you have limited income and resources, you may get extra help to pay for your Medicare drug plan costs.

What are Medicare Health Plans that cover drugs? 

Medicare Health Plans (like HMOs and PPOs) often cover prescription drugs. Medicare Health Plans include:

• Medicare Advantage Plans
• Other Medicare Health Plans.

Medicare Advantage Plans (like HMOs and PPOs) that include prescription drug coverage as part of the plan are health plan options that are approved by Medicare but run by private companies. They are part of the Medicare Program. If you join a Medicare Advantage Plan you are still in Medicare. With Medicare Advantage Plans:

• You generally get all your Medicare-covered health care through that plan
• You may get extra benefits, such as coverage for vision, hearing, dental, and/or health and wellness programs
• You usually will have to pay some other costs (such as copayments or coinsurance) for the services you get. Out-of-pocket costs in these plans are generally lower than in the Original Medicare Plan, but vary by the services you use
• You may have to see doctors that belong to the plan or go to certain hospitals to get covered services
• You don’t need to buy a Medigap policy.

Medicare Advantage Plans

These include:

• Health Maintenance Organizations (HMO)
• Preferred Provider Organizations (PPO)
• Private Fee-For-Service (PFFS) Plans
• Medicare Medical Savings Account (MSA) Plans
• Medicare Special Needs Plans (SNP).

Other Medicare Health Plans

There are some types of Medicare Health Plans that include prescription drug coverage as part of the plan, and aren’t part of Medicare Advantage, yet are still part of the Medicare Program. With these plans, you generally get all your Medicare-covered health care through that plan.

Other Medicare Health Plans include:

• Medicare Cost Plans
• Demonstrations/Pilot Programs
• PACE (Programs of All-inclusive Care for the Elderly).

Why should I get Medicare prescription drug coverage?

Medicare prescription drug coverage provides greater peace of mind by protecting you from unexpected drug expenses. Even if you don't use a lot of prescription drugs now, you should still consider joining. As we age, most people need prescription drugs to stay healthy. For most people, joining now means protection from unexpected prescription drug bills in the future.

Resources

For more information, please read The Facts About Medicare Prescription Drug Plans .

Also, you can read other fact sheets about Medicare Prescription Drug coverage as it relates to the following topics:

• People with Limited Income
• Residents of Nursing Homes / Long-term Care Facilities
• People who get help from state pharmacy programs
• People with Medigap (Medicare Supplement Insurance) Policies
• People who get Supplemental Security Income benefits or an MSP program
• Bridging the Coverage Gap.

For more details about Medicare benefits, contact:
Toll-free ................1-800-MEDICARE (1-800-633-4227);
                               TTY users should call 1-877-486-2048.
Online....................www.medicare.gov

Seniors can also read the Medicare & You 2007 handbook that was mailed to many homes in October.

This article is based on the “Medicare.gov - MPDPF: Supporting Information” webpage, and the “Prescription Drug Coverage: Basic Information” webpage; both are part of the Medicare website. The information provided here is, to the best of our knowledge, reliable and accurate. However, while Life Alert always strives to provide true, precise and consistent information, we cannot guarantee 100 percent accuracy. Readers are encouraged to review the original article, and use any resource links provided to gather more information before drawing conclusions and making decisions.

Dr. Don Rose writes books, papers and articles on computers, the Internet, AI, science and technology, and issues related to seniors.