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The Background and Basics of Medicare Part D
:: What are the details of the 2009 Medicare Part D Program?
:: Which governmental agency is responsible for the Medicare Part D program?
:: How many Medicare Part D plans are currently available?
:: Where did the Medicare Part D prescription drug program come from?
What are the details of the 2009 Medicare Part D Program?
In general, Medicare Part D prescription drug plans provide insurance coverage for your prescription drugs - just like other types of insurance. If you join a Medicare Part D prescription drug plan, there will be a monthly premium ranging from only a few dollars up to over 100 dollars - depending on the benefits of your Part D plan and your state.
Some Medicare Part D plans have an initial deductible ( the amount you pay before the benefit begins) and some Part D plan have no initial deductible or a $0 deductible, providing coverage as soon as you purchase your first prescriptions. Please note, that you may pay a higher monthly premium for Part D plans with no initial deductible.
Finally when you actually use your Medicare Part D plan, your actual prescription costs will vary depending on the particular drug plan you choose.
In more detail:
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- The Medicare Part-D program provides choices for prescription drug plans with an estimated average monthly premium of $35-37. In reality, the plans range, as noted, from under $8.40 to over $135.70. ()
- The CMS model plan have an annual $295 deductible. However, the majority of plans do not have the initial deductible and provide "first dollar" coverage.
- In the model plan, after the deductible is met (the insured has paid the first $295), Medicare will pay 75% of the covered prescription costs up to $2405.
- The insured person pays the remaining 25% ($601.25). These types of plans (that follow the CMS model plan) are using co-insurance: 25% Insured - 75% Insurer
- In many/most plans, prescription drugs are arranged in "tiers" or logical groups and are assigned a fixed dollar value based on the tier. This is meant as Copayment.
- After the $2405, the insured person pays the 100% of the next $3453.75. This is the so called "donut hole" or Coverage Gap. Some plans will provide coverage through the "donut hole", at an additional monthly premium.
- The insured person then has a co-payment thereafter of 5%. Here the person has emerged from the Coverage Gap when there out of pocket expenses have reached $4350. They are now in what is called "Catastrophic Coverage".
- Benefits may vary depending on income levels. Extra-Help programs are available based on financial need.
- Premiums may increase annually. Drug lists or formularies may change with 60 days notice.
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:: Click here to estimate your out-of-pocket expenses with Medicare Part D
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Which governmental agency is responsible for the Medicare Part D program?
The Centers for Medicare and Medicaid Services (CMS) or Medicare is responsible for the administration of the Medicare Part D prescription drug program. Private insurance carriers actually implement the various Medicare Part D plans across the country under the direction of CMS.
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How many Medicare Part D plans are currently available?
There are approximately 40 to 50 Medicare Part D prescription drug plans (or PDPs) available in each state or CMS region.
Estimates suggest that in 2009 there are 1,439 Stand Alone Medicare Part D prescription drug plans (or PDPs) across the entire county.
Of these plans, there are 19 companies offering plans on a national level.
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Where did the Medicare Part D prescription drug program come from?
Medicare Part D plans have their origin in the Medicare Prescription Drug, Improvement, and Modernization Act which was passed on December 8, 2003. This law established a voluntary drug benefit for Medicare beneficiaries and created the new Medicare Part D program. In short, the Medicare Modernization Act and the Medicare Prescription Drug Improvement feature gives Medicare beneficiaries, that is seniors and disabled citizens eligible for Medicare access to drug coverage beginning in January of 2006.
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Last updated on: 11/14/2008
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