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What Is a Medicare Part D Insurance Policy?

Medicare is a source of health insurance for people 65 and older. The federal government runs some parts of Medicare, Parts A and B, while other parts of Medicare are available from private insurance companies. A Medicare Part D insurance policy is prescription drug coverage that you can purchase from private insurance companies.

  1. Eligibility

    • Medicare Part A provides hospital insurance, while Medicare Part B provides insurance for doctor visits and other outpatient services. These parts of Medicare generally do not cover prescription drugs. To buy Medicare Part D insurance, a Medicare prescription drug plan, you must have Medicare Part A or Part B.

    Coverage

    • Companies that sell Medicare Part D insurance can set up their own benefit plans, provided the plan meets the minimum requirements of the 2003 Medicare Act. Therefore, available prescription drug plans cover different lists of medicines, called a formulary, and have different costs. You must compare available plans to find one that works best for you.

    Minimum Plan Requirements

    • The minimum requirements for Medicare Part D plans include coverage of at least two drugs in each drug class and coverage of most drugs in these six categories: antidepressants, antipsychotics, anticonvulsants, antiretrovirals, anticancer drugs and immunosuppressants. The plan must also give you the option to request coverage for a drug not usually covered but that your doctor deems medically necessary. Plans must also have a network of convenient pharmacies and work with nursing homes. In 2010, the maximum annual deductible allowed was $310.

    Considerations

    • The types of available Medicare Part D plans and their costs vary by state. Contact your state's insurance department to find out what's available in your state. If you currently have Medicare, you can buy or change Part D coverage from Nov. 15 though Dec. 31 of each year. When you first enroll in Medicare Part A or B, you have seven months to buy a drug plan; the starting point is three months before you become eligible for Medicare to three months after becoming eligible. If you don't buy a Part D plan when you are first eligible and want to buy one later, you may have to pay a late-enrollment penalty.

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