Medicare began it’s Part D program January 1, 2006, in which it started to cover some of the costs medications that are taken home (that are prescriptions). The benefits of the program are offered/purchased through companies that have been approved by Medicare, specifically Medicare Advantage (that are managed care) and Part D plans. The reform act of 2010 (Obamacare) began a 10-year expansion of the Part D program that will completely close the donut hole. Many Medicare recipients have high annual prescription drug costs that the program doesn’t currently cover.
What Does it Cost?
Plans vary in cost, they begin at $0 and go up to about $90 per month for the most comprehensive plans, the average plans costs $30-$50 in monthly premiums. In every town/area there will be different plans on the market.
What Does It Cover?
Each plan has a formulary (which is a list) of medication that it will cover. A plan will only pay (a specific portion) for a drug on the list and it has to be purchased through a pharmacy that is within its network.
What will be your Plans Share?
There are four different payment stages for basic coverage and they are:
- Deductible. You’re responsible for the first $320, there are certain plans that waive the deductible but they cost more.
- Partial coverage. Once the first $320 is covered, you will be responsible for 25 percent of the costs while your plan pays the other 75 percent (the donut hole begins at $2,930). Your share will taken as a co-pay for each item that is purchased. Depending on your plan, the co-pay may be lower for generic drugs or higher for brand-name.
- Coverage gap. As soon as your annual expenses reach $2,930 (and before you spend $4,700 in out-of-pocket expenses) you will be responsible for 100 percent of your prescription drug expenses (higher premium plans will cover a portion). As of 2012, brand-names have to sold at a discount of 50 percent and generics have to be sold for 14 percent less.
- Catastrophic coverage. Once your costs reach $4,700 your Part D plan will cover 95 percent of your expenses leaving you with 5 percent.
Part D: a Corporate Giveaway
The entire prescription drug program is managed by insurance companies, which means, premiums pretty much go towards paying for their profits and their incredibly inefficient overhead.
In addition, there is a provision within the Part D law that doesn’t allow Medicare to negotiate for lower drug costs only the private companies are allowed to… private companies are not going to bother with negotiations any time soon to save Medicare recipients money.
The Veterans Administration has been negotiating with pharmaceutical companies for years and there drug prices are half as much compared to any Part D plan. Medicare has the ability to utilize this same exact buying power but the law prevents Medicare from negotiating with pharmaceutical companies for lower pricing.
Medications from Canada
Prescriptions drugs cost anywhere from 50 to 80 percent less in Canada, this is for the exact same drugs that are available/manufactured in the USA. The Public Health System in Canada limits/regulates how prescriptions can be priced (pharmaceutical companies still manage to make lots of money).
The FDA has made it illegal to import medications (at a commercial level) from Canada in order to protect drug companies (obviously, at the expense of consumers). Since October 2006, Customs has stopped taking in mail-order prescriptions that are being imported.
Certain Drugs/Prescriptions Excluded by Law
Medicare prohibits certain categories of drugs from being covered in a Part D plan. It doesn’t matter if it’s prescribed by your doctor and some of these categories Medicaid will actually cover, they are:
- sedatives and sleeping pills of a sort
- specific types of tranquilizers
- weight loss or weight gain related drugs
- over-the-counter medications
Part D Formularies for 2013
Every plan has a list of drugs that it will cover and it must include 2 drugs from every “therapeutic class” (Medicare requires it). A plan can offer more then two options and it can charge more for having more within its formulary.
Your plan will cover any share of the cost on any medication if it’s not on the plans formulary. Anything you spend on non-formulary prescriptions will not be put towards your deductible.
Insurance companies are allowed to charge different co-pays for different medications even for prescriptions that are a part of the same ‘class’. Generally, they require lower co-payments on generic drugs and higher for brand-name or different co-payments on brands of the same class/category.
Overcoming a Formulary Restriction
Every Part D plan has some type of system (at least two) in place which allows its recipients to challenge/question its listing or how it covers a specific medication.
- It has to have a system for requesting an “exception” to its formulary. For this type of exception you’d need your doctor to prove that it’s a medical necessity.
- Regularly, plans changes their rules and how they price medications. Every plan has to allow people to appeal its decisions through a process that is completely run by the insurance company. If the ‘internal’ review doesn’t workout then you may go after an independent review in court.
Part D programs are allowed to contact your pharmacy and have them substitute the prescription drug that you request with a therapeutic equivalent one (even if it’s not exactly what your doctor prescribed). This means, your plan can have the pharmacy dispense a different drug to you as long as it is therapeutically equivalent. “Equivalence” doesn’t mean it has to have the exact same effect on you. What your doctor prescribes may be more effective for you (and have less side effects) but your plan can over rule what your physician recommends. You can fight your plans substitution policy through an appeal.
A plan can enforce a treatment structure in which its recipients have got to give a certain drug a shot, it’s most likely a less expensive alternative, before they will cover another of the same class. If this happens, your physician will have to get involved and let your insurer know that you’ve tried the alternatives.
For each prescription that you have filled and co-payment will be necessary. To keep costs down you can have your doctor prescribe a few months worth of a medicine at a time. Part D plans tend to block this tactic by placing a supply limit on how many doses can be fulfilled at a time.
Deciding on Participation of Part D for 2013
Medicare has created an actual monetary penalty for those that delay enrollment into a plan unless you are enrolled with an employer or union sponsored health plan which is considered ‘creditable coverage’. For every month that you delay enrollment into a plan you will be penalized with a 1 percent increase in premium, up to a maximum of 24 percent.
If at all possible, see if there are any Part D plans that are free in your area so you don’t have to incur the penalty when you are ready to sign up for a plan.
Let us know if you’ve got any questions on Part D enrollment, exceptions, and appeals or on how switching to a different plan works.