Medicare Part D
Medicare is the government program that provides health care benefits primarily to people age 65 or over. It also covers those who are disabled and receiving Social Security, as well as those with certain medical conditions.
Starting January 1, 2006, Medicare has made a basic drug benefit (Part D) available to all Medicare participants.
Rather than providing this coverage directly, Medicare is contracting with private entities, such as commercial insurance companies, pharmacy benefit managers and employer health plans (like NRECA).
How Medicare’s Standard Part D Plan Works
Most commercial plans offer a plan based on the Medicare's standard plan. You pay a premium each month to be covered by a Medicare prescription drug plan, plus costs for covered prescription drugs.
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In addition to your monthly premium, you pay a share of the cost when using your benefit each year:
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You pay
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Plan pays
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| First, you pay the annual deductible. The deductible may change every year. For 2011, the annual deductible is $310. |
$310 |
$0 |
| Next, you pay 25% of the cost—the coinsurance—between the annual deductible and the initial coverage limit. For 2011, the initial coverage limit is $2,840, so you pay 25% of the cost for the next $2,530 in covered drugs. |
$632.50 |
$1,897.50 |
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At this point, you reach the initial coverage limit. You now move into the coverage gap.
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Subtotal
$942.50
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Subtotal
$1,897.50
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While in the coverage gap, you pay a share of the cost until you reach $4,550, the maximum in true out-of-pocket costs or TrOOP.
- For brand-name drugs, you pay 50% of the cost for covered drugs and you receive manufacturer discounts for the other 50% of the cost.
- For generic drugs, you pay 93% of the cost of covered drugs and the Plan pays 7% of the cost.
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Brand-name: You pay 50% and get a 50% discount
Generic: 93%
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Brand-name: $0
Generic: 7%
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At this point, the amount you paid and the manufacturer discounts you received equal the maximum in true out-of-pocket (TrOOP) costs. You are now eligible for catastrophic coverage.
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Total
$4,550
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N/A
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| You pay the greater of 5% of the cost of covered drugs or a minimum copayment—this is catastrophic coverage. For 2011, the minimum copayment is $2.50 for generic drugs and $6.30 for brand name or specialty drugs. |
5%
No limit |
95%
No limit |