Understanding the Medicare Prescription Drug Plan (Part D)

Medicare has an optional benefit—known as Medicare Part D—that provides those who are eligible for Medicare supplemental insurance to help pay for prescription drugs (Medicare does not provide any coverage for prescription drugs without this supplemental insurance). If you elect to purchase the extra coverage, you will pay a monthly premium. Depending on your personal circumstances, the plan may help lower prescription costs. Enrollment is currently open to add Medicare Part D to your Medicare coverage. Enrollment runs from October 15 through December 7 each year.

The way the benefit will work in 2014 is as follows: covered members will pay for the first $310 of their prescriptions out-of-pocket, which is considered the deductible for the plan. Of the next $2,540 in prescription expenses, Medicare will pay 75% ($1,905), and the Medicare enrollee will pay 25% ($635). Enrollees will be totally responsible for the next $3,605 in prescription expenses; if they spend that, the annual out-of-pocket expense will have reached $4,550. At that point, Medicare Part D will pay 95% of all subsequent expenses, and the member is responsible for only 5% of the costs.

All employers are required by law to provide information to their employees about the Medicare Part D Prescription Drug Plan. This information is provided in order to inform them as to whether the insurance plan offered to employees is “creditable,” meaning that the prescription coverage offered by the employer is more comprehensive than what would be provided through Medicare Part D.

Although they are eligible, many people may opt not to include prescription coverage in their Medicare benefits, especially if they are still working and/or are covered by another insurance plan that offers “creditable coverage” for their prescription needs. The downfall to not enrolling when you are initially eligible (when you first begin receiving Medicare benefits and/or no longer have “creditable coverage”) is that for each month you don’t enroll, you will pay a penalty of 1% onto the cost of the benefit once you decide to add it. For example, if you do not have “creditable coverage” with your employer and you wait 19 months to add Medicare Part D coverage, you will pay 19% more per month than others might pay for the same benefit when you finally decide to add it. In addition, you may have to wait until the following Open Enrollment period, beginning the next October, to enroll.

For more information about your options under Medicare prescription drug coverage, visit www.medicare.gov, or call 1-800-MEDICARE (1-800-633-4227).

For people with a limited income and resources, extra help for paying for the Medicare prescription drug coverage is available at www.socialsecurity.gov, or by calling 1-800-772-1213.

By Geraldine Phillips

Ms. Phillips coordinates the benefits for employees of the Gurwin Jewish Nursing & Rehabilitation Center.