Medicare Prescription Drug Coverage
Paying for Coverage
Coverage and Costs Vary
The coverage and costs are different for each Medicare drug plan, but all plans must provide at least a standard level of coverage set by Medicare. Costs and coverage for particular drugs will vary depending on which drugs the person uses, which Medicare drug plan he or she chooses, whether they go to a pharmacy in the plan's network, and whether they qualify for "extra help" from Medicare to pay for prescription drug costs. ("Extra help" is a program to help people with limited income and resources pay prescription drug costs.)
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Payments a person may make in a Medicare drug plan include monthly premiums, yearly deductibles, co-payments, co-insurance, the coverage gap, and catastrophic coverage.
Premiums
Most drug plans charge a monthly fee, or premium, that varies by plan. A person pays this in addition to the Part B premium. If someone belongs to a Medicare Advantage Plan (like an HMO or PPO) or a Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium may include an amount for prescription drug coverage. The amount of the monthly premium is not affected by a person's health status or by how many prescriptions are used.
Yearly Deductible
The yearly deductible is the amount a person pays for prescriptions before the plan begins to pay. Some drug plans charge no deductible.
Co-payments
Co-payments or co-insurance are the amounts a person pays for prescriptions after the deductible is paid. The person pays his or her share, and the plan pays its share for covered drugs. In some plans, a person pays the same co-payment or co-insurance for any prescription. In other plans, there might be different levels or "tiers," with different costs. For example, a person might have to pay less for generic drugs than brand names. Or, some brand names might have a lower co-payment than other brand names. Also, in some plans, a person's share of the cost can increase when the prescription drug costs reach a certain limit.
The Coverage Gap
Most Medicare drug plans have a coverage gap. This means that after the person and that person's drug plan have spent a certain amount of money for covered drugs, the person then has to pay all costs out-of-pocket for the drugs, up to a limit. The yearly deductible, co-insurance or co-payments, and what the person pays while in the coverage gap all count toward this out-of-pocket limit. The limit doesn't include the drug plan's premium.
If a person reaches the coverage gap, he or she may get a 50% discount on brand-name prescription drugs and a 7% discount for generic drugs at the time they buy them. There will be additional savings for people who reach the coverage gap each year thereafter until the gap is completely closed in 2020.
Once a person reaches the plan's out-of-pocket limit during the coverage gap, "catastrophic coverage" automatically kicks in. Catastrophic coverage assures that once a person has spent up to the plan's out-of-pocket limit for covered drugs, he or she will only pay a small co-insurance amount or a co-payment for the rest of the year.
It's important to note that people who get "extra help" paying drug costs won't have a coverage gap and will pay a small or no co-payment once they reach catastrophic coverage.
Four Ways to Pay
In general, there are 4 ways to pay for Medicare drug plan premiums.
- Have the premium deducted from a checking or savings account.
- Have the premium charged to a credit or debit card.
- Be billed each month directly by the plan. (Some plans bill in advance for coverage the next month.)
- Have the premium deducted from a Social Security payment. Contact the person's plan (not Social Security) to ask for this payment option.
In most cases, the prescription drugs provided in an outpatient setting like an emergency room aren't covered by Part B. A person's Medicare drug plan may cover these drugs under certain circumstances. The person will likely need to pay out-of-pocket for these drugs and submit a claim. Call the plan for more information.
Help With Drug Costs
People with Medicare who have limited income and resources may get "extra help" to cover prescription drugs for little or no cost. If you think the person may qualify for extra help, call Social Security at 1-800-772-1213, visit http://www.ssa.gov, or contact your State Medical Assistance (Medicaid) office. TTY users should call 1-800-325-0778.
Several states have State Pharmacy Assistance Programs (SPAPs) that help certain people pay for prescription drugs. In general, each SPAP makes its own rules about how to provide drug coverage to its members. Depending on the state, the SPAP will have different ways of helping a person pay for prescription drug costs. To find out about the SPAPs in your state, call 1-800-Medicare (1-800-633-4227). TTY users should call 1-877-486-2048.
