It's not simple. It's not 100%.
Things would be much easier if the program was so simple as to say all your prescription costs are covered. Period. But that's not case. Bear with us while we try to put this in plain talk.
Here's a confusing way to look at it: There's a deductible amount you must spend before coverage starts, then there's a range in which you pay something and the government pays most, then there's another range where you are all on your own --no coverage-- and finally there's a top range where the government pays for almost all your expense. We'll explain all this in detail.
Two important points before we get to the details of coverage is (1) participation in Part D is voluntary. You can choose to not take part, and it won't change your other Medicare coverage; and (2) there's a premium to participate in this new program. It will cost you at least $32.20 per month, which is the Federally mandated minimum premium. Premiums will vary, depending on the insurance company you choose as a provider, because many offers will include health insurance beyond the Medicare bare bones minimum.
You pay the first $250
You will have to pay for the first $250 in prescription costs each year. That's the "deductible" which is the beginning of your coverage.Medicare pays for 75% of the next $2000
Once your prescription costs exceed $250, Medicare will pay for 75% of the cost of your ongoing prescription needs each year. This coverage lasts for the next $2000 in drug costs.The doughnut hole
After you have reached the $2,000 limit described above (that's $2,250 of total annual costs: the first $250 deductible + the $2,000 covered amount) you reach a plateau in which coverage stops. Nada. Nothing. This is called the "doughnut hole", but its NOT a sweet little treat to enjoy. The doughnut hole lasts for the next $2,850 in purchases.You have to pay for this $2,850 all on your own, or else buy extra coverage from an insurance company to cover you.
After $5,100, it's back to being covered
By the time you've used for (1)the deductible, (2) the $2,000 covered period, and (3)the $2, 850 doughnut hole, you'll be at a total of $5,100 spent on pharmacy prescriptions in one year. At this point, the coverage kicks in again, and Medicare pays approximately %95 of your drug costs. We say "approximately" because there are provisions concerning generic vs. name-brand drugs which define the exact amount of coverage you will have. There is no limit at this plateau; your coverage goes on for whatever cost you incur in one year.By the time you hit the $5,100 level, you will have spent $3600 out-of-pocket for your portion of the prescription costs, PLUS $386.40 for the minimum monthly premiums. That's a total cost to you of $3986.40. Your situation will, of course, most likely be different than the exact $5,100 we just used as a total.
After a year, the whole process starts over
The complete program is based on annual coverage, which means all the numbers we just explained start over every year.A word about which drugs are covered by this plan
This plan only pays for drugs on an approved list, called a formulary. This might sound terribly limiting, but its probably not a major issue. In many cases, the difference between being in the approved formulary and not being in is a brand-name vs. generic consideration.The formulary lists will be different as you shop different insurance companies. The legal requirement is that they abide by a minimum set by the government, but after that, they can vary a great deal. Remember: this is a government program that you must buy from a private company. You won't be getting Part D coverage directly from the government.
I Need To Know series:
(Home) Plain talk about the Medicare Prescription Drug Plan
What is the Medicare Prescription Drug Plan?
Important Dates and
Deadlines for Plan D
How much will it cost me for Medicare Prescription Program Part D?
Beware of Scams: Part 1
Beware of Scams: Part 2
