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Exploring Medicare Part D


The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) was passed in November 2003. This act implemented a plan to add a Part D Prescription Drug Benefits to the standard Medicare Coverages. Part D first became effective on January 1, 2006.

This coverage is provided through private prescription drug plans (PDPs) that contract with Medicare. To receive the benefits provided, beneficiaries must sign up with a plan offering this coverage in their area and must be enrolled in Medicare Part A or in Parts A and B. In areas where no private plans are offered, the government offers a standard plan. Medicaid recipients are automatically enrolled.

Medicare beneficiaries choose between stand-alone plans that offer coverage on a fee-for-service basis, and integrated plans that group coverages together, including PPOs and HMOs (known as Medicare Advantage).

These plans offered by private companies are restricted by some standards set by Medicare, but still have freedom to personalize their plans. Providers must cover drugs for certain classes, but do not have to cover every drug in each class.


The Annual Enrollment Period for Part D runs from November 15 December 31. During this period people with Medicare can enroll in a plan or change their enrollment from one plan to another. Individuals who are already enrolled in a Medicare Part D plan should determine if they want to make changes to their current plan for the upcoming year, as this is the time to make changes. If no changes are desired, then individuals need not do anything as they will remain in their plan.

All plans will have different costs and benefits from year to year, thus it is advisable for all beneficiaries to consider their options and make the best choice they can for the coming year.

While coverage does not begin until January, plans can market beginning in October and beneficiaries can begin making choices on November 15th.
Those who sign up for the standard Prescription Drug Plan (PDP) will have a monthly premium (the amount will vary from state to state and depend on income level).

Beneficiaries will first need to pay a deductible of $295 (up from $275 in 2008) before the plan will pay anything toward prescription cost. Beneficiaries will then pay 25% of $2405 or $601.25 (up from $2235 in 2008), while the plan will pay 75% of the $2405. Once this limit is reached, a gap called a doughnut hole occurs, in which the beneficiary is responsible for 100% of prescription drug costs. During the doughnut hole or the gap the beneficiary must pay 100% of $3453.75. After all payments on the plan have reached $6153.75 (this includes payments made by the beneficiary as well as the plan) catastrophic coverage begins. During catastrophic coverage the beneficiary pays 5% while the plan pays 95%.

For more information on Medicare Part D look for additional articles here and/or visit www.medicare.gov.

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