Medicare Drug Coverage - AARP

[Pages:28]Medicare Drug Coverage What You Need to Know about...

Comparing Plans Enrolling in a Plan Switching Plans Keeping Your Costs Down

Table of Contents

Introduction

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What is Medicare Drug Coverage?

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How does the coverage work?

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What do the plans cover?

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What Should I Consider When Choosing a Plan?

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Cost

4

Coverage

5

Convenience

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Customer Service

7

Joining and Using a Drug Plan

7

Should I enroll in a plan?

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How do I compare Medicare drug plans?

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How do I enroll in a plan?

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When can I enroll in plan?

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How do I use my plan?

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How and when can I switch plans?

12

Exceptions, Appeals, and Complaints

14

Good Things to Remember

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Keeping Your Costs Down

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Where Can I Get Help with the Costs?

18

Who Should I Call?

20

Quick Medicare Part D Enrollment Checklist

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Medicare Part D Coverage Determination Request Form 23

Copyright ?2006 AARP.

Introduction

Each year, from November 15 to December 31, people enrolled in a Medicare drug plan may switch plans. Others who have not yet enrolled in a plan can also use this time to sign up.

In October, drug plan sponsors will start promoting their drug plans for the coming year. If you already have Medicare drug coverage, you will want to read over the changes, if any, made to your plan and compare this coverage with other plans available in your area. The information in this booklet will help you choose drug coverage that meets your needs. If you decide to keep the same drug plan, you can continue your coverage without doing anything.

If you haven't yet enrolled in a drug plan, and you think you might like to do so, you'll find this same information useful in helping you decide whether or not Medicare drug coverage is right for you and, if so, how to enroll.

What is Medicare Drug Coverage?

Medicare, the federal health insurance program for people 65 and older and for younger people with disabilities, offers insurance coverage to help pay for prescription drugs. This insurance coverage is known as Medicare Part D.

There are two kinds of Medicare plans that provide insurance coverage for prescription drugs:

1. "Stand alone" prescription drug plans that offer only prescription drug coverage. You can add this type of plan to Original Medicare and some types of Medicare Advantage plans that do not cover prescription drugs; or

2. Medicare Advantage Plans (which you may also see referred to as Medicare Health Plans or Medicare Part C) such as health maintenance organizations (HMOs) or preferred provider organizations (PPOs). You can get all of your Medicare health care and prescription drugs through one plan.

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How does the coverage work?

? Everyone on Medicare can get drug coverage, regardless of income. ? You choose and enroll in a private plan approved by Medicare. ? The coverage is voluntary; you don't have to sign up. ? You cannot be denied coverage for health reasons. ? There is no single Medicare drug plan. Wherever you live, you will

have several plans from which to choose. Also: ? If you are worried about not being able to pay the insurance pre-

miums, copays and the deductible for Medicare Part D, there is a program known as Extra Help, which pays for or lowers these costs for people who qualify. Many states also have programs that may help pay the cost of prescription drugs. (Learn more on page 18.) Helpful Tip: If you already receive Extra Help paying for Medicare prescription drug coverage, you may get a letter from the Social Security Administration asking whether your financial situation has changed during the year. If it hasn't changed, you will not need to fill out the application form again to keep the Extra Help in the following year.

What do the plans cover?

The standard drug benefit provides: ? An initial level of prescription drug coverage, and ? Added protection for those with very high drug costs (known as

catastrophic coverage). Medicare drug plans may look very different from the standard benefit. However, all drug plans approved by Medicare must offer the standard level of coverage set by Congress. Many plans provide greater savings and more coverage.

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Here is the standard level of Medicare drug coverage:

Deductible Initial Coverage

You may need to first pay a deductible (up to a maximum of $265 per year in 2007) before your plan starts to help pay for your drugs.

Your drug plan will then pay about 75 percent of your drug costs and you will pay roughly 25 percent of your drug costs, up to a combined total of $2,400 in 2007.

Coverage Gap also called the Donut Hole

If your total drug costs, that is, the amount paid by both you and your drug plan are higher than $2,400 (in 2007), you will pay 100 percent of the cost of your drugs up to $3,850 (in total) out-of-pocket (in 2007) before your coverage starts again. Note: Premiums don't count as out-of-pocket drug costs.

Catastrophic Coverage

Once your total drug costs reach $5,451.25 in 2007, your plan will cover up to 95 percent of the rest of your prescription drug costs for the calendar year.

(Medicare law requires that these dollar values be updated each year.)

What Should I Consider When Choosing a Plan?

Consumers can choose from many drug plans. Each drug plan sponsor can offer up to three different drug plans. The benefits and costs are different between sponsors and drug plans.

When choosing a plan, you should consider the four Cs.

? Cost--How much do my drugs costs? How much are the plan's premiums, deductible, coinsurance, and copays?

? Coverage--What drugs are covered by the plan?

? Convenience--Are there plan pharmacies in my community? Does the plan provide a 90-day supply through the mail?

? Customer Service--How easy is it to reach a plan representative when you have a question?

The following section describes the features common to most drug plans and how they may vary.

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Cost

Deductible--The amount you have to spend on drugs at the beginning of the calendar year before your coverage starts. Each year, Medicare sets an upper limit on the deductible. In 2007, the limit is $265 annually. Plans can have lower deductibles, and some plans have no deductibles.

Premiums--A set dollar amount you pay usually each month to your drug plan sponsor. The amount will depend on which drug plan sponsor and what drug plan you choose. Like Medicare Part B, each person must pay a premium; there are no discounts for couples.

Copayment--A fixed amount that you pay for each prescription, for example $15 for your share of each prescription.

Coinsurance--A percentage of a drug's cost that you pay for each prescription, for example 25 percent of the total cost of each prescription.

Some plans use copayments, some use coinsurance, and some use a combination of both.

Helpful Tip: Which drugs you take and how much they cost under different plans is more important in calculating your out-of-pocket costs over the year than looking only at premiums and deductibles.

Plans usually have three or four copay or coinsurance levels called tiers. Here is how they work:

Helpful Tip: When a drug is in a higher tier (not "preferred" by your plan), it usually means you pay more out-of-pocket. Ask your doctor whether an alternative drug--one that is on your plan's preferred list-- could be right for you. This will save you money and may keep you out of the coverage gap.

Different plans may place the same drug on different tiers. Therefore, you may pay more for a drug with plan X than you do for the same drug with plan Y.

TIER ONE generic drugs lowest cost copay

TIER TWO preferred brand name drugs

medium cost copay

TIER THREE non-preferred brand name drugs

higher cost copay

TIER FOUR very expensive or specialty drugs highest cost copay or coinsurance

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Coverage

Formulary--The list of drugs your plan covers. Plans must offer at least two drugs in each class of drugs (e.g., beta blockers, diuretics, and other classes) and they must cover nearly all drugs used in six classes: antidepressants, antipsychotics, anticonvulsants, antiretrovirals (for HIV/AIDS), immunosuppressants (for transplants), and anticancer drugs.

Drug plan sponsors also can place limits on the drugs they cover in several ways:

? Prior authorization or prior certification--An approval you must get from your plan before the plan will pay for a drug. This means that your doctor will have to tell your plan why it is necessary for you to take a drug before the plan will pay for it.

? Step Therapy--A plan requirement that you first try a certain medication that has been proven effective in treating your condition before the plan will pay for a newer or higher price drug.

? Quantity Limits--The number of pills you can get over a certain period of time. This is normally used as a safety measure to be sure people aren't taking more than the commonly prescribed dose of a medication for the treatment of an illness or condition.

Coverage gap or donut hole--The gap in drug coverage between your plan's initial level of coverage and catastrophic coverage when you must pay the total cost of your prescription drugs out-of-pocket. Some plans pay for prescription drugs in the coverage gap. Of plans that do, some may cover both generic and brand name drugs while others may cover only generics.

Helpful Tip: Knowing the total cost of the drugs you take--that is, the amount paid by both you and your drug plan--will help you choose the level of coverage you need. For example, if your drugs cost about $300 per month, you'll enter the coverage gap part way through the year--you may want to consider getting a plan that pays for drugs in the coverage gap. If your drugs cost about $100 per month, you may not want coverage in the gap since you don't expect your drug costs will hit the $2,400 limit (in 2007) on initial coverage. The monthly Explanation of Benefits statement sent by your drug plan will show you how much you and your drug plan have spent for the year and how close you are to reaching your plan's coverage gap.

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Getting Out of the Coverage Gap

In the coverage gap, the following count toward your out-of-pocket expenses to qualify for catastrophic coverage: ? your deductible ? your copays ? payments you make out-of-pocket for drugs covered on your plan's

formulary (including any exceptions you receive) and purchased from a pharmacy in your plan's network ? payments for your drugs in the gap made by a family member, friend, a charitable group (unless affiliated with a union or employer), and some payments made by state pharmacy assistance programs.

In the coverage gap, the following do not count toward your out-ofpocket expenses to qualify for catastrophic coverage: ? your premiums ? payments you make out-of-pocket for drugs not covered on your

plan's formulary or purchased from a pharmacy not in your plan's network ? payments made by your plan or by an employer, union, federal agency, or other group insurer ? any drugs bought from Canada or other foreign countries ? free or low-cost drugs received from a drug manufacturer's patient assistance program or as free samples from a physician.

If you have questions about what out-of-pocket spending does and doesn't count in the coverage gap, contact your plan.

Convenience

Pharmacy Network--Pharmacies that contract with your drug plan sponsor. Your plan may limit you to using only pharmacies within its network (except in special circumstances specified by your plan). You will want to be sure the plan you choose works with pharmacies that are convenient to you. You may also want to check whether or not the plan offers mail order drug refills.

National or Local Plan--If you live in more than one place, like another state, for a part of the year or travel for long periods of time, you will want to choose a plan that has coverage everywhere you need it.

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