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Medicare Part D Programs

Medicare Part D is Medicare's prescription-drug program. Part D differs from Parts A and B in that it's offered exclusively through private companies approved by Medicare. You can purchase a standalone plan, a Medicare Advantage plan that includes Part D or no plan at all. Plans offered vary by state, and each company typically offers two or three plans with different monthly premiums, co-pays and deductibles. Financial help is available if the plans are more than you can afford.

  1. Standalone Plans

    • Standalone plans, also known as Medicare Prescription Drug Plans, or PDPs, work with original Medicare or original Medicare with a Medicare supplement, or Medigap, plan. These plans have a monthly premium, co-pays, and a coverage gap. Coverage starts when you've reached a set amount of total drug costs (this includes what both you and the insurance company have paid). This total was $2,840 in 2011. After that, you're responsible for a larger share of drug costs (half of generics and 7 percent of brand-name prescriptions) until you've reached a set out-of pocket amount ($4,550 in 2011). After that, you have what's known as catastrophic coverage, which has dramatically lower premiums.

    Medicare Advantage Plans

    • Medicare Advantage (MA) plans frequently include Part D prescription-drug coverage. There is no separate premium for Part D; it's included in the overall plan premium. There are still co-pays and deductibles for prescriptions, and the coverage gap still applies. MA plans are offered by private companies, just like standalone Part D plans. In fact, many companies offer both, so it's important to carefully review plan materials so you're clear on what you're signing up for. If you have questions or concerns, call the insurance company or Medicare.

    Other Creditable Coverage

    • You may not need a Part D program at all. You don't need to sign up if you have equivalent coverage elsewhere. This includes prescription coverage through a current or former employer, a union, TRICARE (military) or the Veterans Administration. You are subject to a penalty if you don't sign up for a Part D plan when first eligible; ask your plan administrator or Medicare if you're not sure if you need to sign up for a plan. Your initial Part D enrollment period starts three months before the month you're eligible for Medicare A or B and lasts for three months after. You also have a special enrollment period if you lose other creditable coverage. This period lasts for two months.

    Financial Assistance

    • "Extra Help" is a Part D program that provides varying levels of financial assistance to those that need it. Depending on your income and assets, you may qualify for full or partial coverage of your Part D premium, and full coverage for your prescriptions with no gap (see Resources). Apply for "Extra Help" through Social Security.

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