Medicare Part D Plans: What You Should Know

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Medicare Part D plans are provided only through private insurance companies that have legal agreements with the government; it is never provided directly from the government. If you want Part D, you must choose Part D coverage that works with your Medicare health benefits.

If you have Original Medicare, choose a stand-alone Part D plan. Enrollment outside of your Open Enrollment is typically between Oct. 15th through Dec. 7th of each year, or Annual Enrollment Period (AEP).

If a Part D plan is not picked up when eligible you will be penalized 1% each month you could have had the plan, and didn’t. This penalty will be paid separately to Medicare if you enroll in a Part D plan in the future.

Medicare Part D Plans – Prescription Drugs

There are three phases of coverage to understand with Part D Medicare. The three phases are the Initial Coverage, Donut-Hole, and Catastrophic. It is important to understand these phases, particularly if you find yourself requiring high cost for your prescribed medication.

The Initial Coverage Phase is outlined with the Part D Medicare Plan chosen. This will consist of deductibles, co-pays, and coinsurance that the beneficiary will be required to pay, and adhere to up to reaching the Initial Coverage Limit.

The 2016 Initial Coverage Limit for a beneficiary’s prescribed medication cost is $3,310. This is calculated by full retail cost of a beneficiary’s medication, not what they spent out of pocket. Once the limit is reached you will enter into the next phase of coverage, the Donut-Hole.

The Donut-Hole Phase starts once the initial coverage limit is reached. Then the beneficiary has to pay the full cost of his, or her, prescription drugs up until the total out-of-pocket expense is reached. In 2014 the total out-of-pocket requirement is $4,850. Once this amount has been reached the Catastrophic Phase is next.

The Catastrophic phase will continue from this point allowing the beneficiary to pay the outlined co-pays. This will reduce their cost a great deal until the next calendar year. Then everything will reset and start with the new outline of benefits for the current years plan.

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