Medicare is a health insurance program administered by the Centers for Medicare and Medicaid services. There are two parts (A and B) to Medicare that offer basic coverage to those that are sixty-five years of age. Original Medicare does not offer prescription drug coverage. However, the insured can obtain drug coverage in one of two ways. First, they can enroll in a Medicare Prescription drug plan which can add drug coverage to Original Medicare for an additional premium; or they can enroll in a Medicare Advantage Plan. Part D plans are run by private insurance companies, not the government. But the federal government dictates which basic medications must be covered.
A Part D plan may or may not have a deductible, but the maximum deductible for 2019 is $415 with a premium of around $33.50. Once the deductible is satisfied, the insured will pay 25% of the next $3,405 of your prescription costs for the year. So $851.25 that will be coming out of the insured’s pocket for the year while their Medicare drug plan pays 75% ($2553.75)
In 2019 once the insured and Medicare have spent $3,820 on covered medications, the insured will enter the coverage gap. The coverage gap is what is known as the “donut hole”, which is a temporary limit on what the drug plan will cover for drugs. Once the insured enters the donut hole, they will need to pay 100% of the cost of their drugs out of pocket until they’ve spent an additional $3,833.75. But once the prescriptions have reach a total of $7,635.75, the insured will have paid $5,100 and Medicare paid $2,553.75.
For example, a covered brand-name drug costs $60. There’s a $2 dispensing fee added on which makes a total of $62. The covered person pays 25% of that total under Part D which is $15.50. (62 X .25= $15.50)This amount that the covered person pays, plus the manufacturer discount payment ($42) counts as out of pocket spending. That is a total of $57.50 that goes toward the out of pocket spending and moves the covered person further out of the coverage gap. Once that gap is closed, Medicare will usually pay 95% of the cost of the medications from that point forward.
What this all means is that, unlike Original Medicare, Part D has a deductible that the insured is held liable for before any coverage kicks in. Even after the deductible is honored, the insured is still liable for a certain percentage of their prescriptions until they’ve spent a maximum amount out of their own pockets. After that, they will have to pay 100% of their prescriptions for a short time until they’ve filled that “donut hole” and then Medicare pays 95% of the cost of their prescriptions.
If you have questions or are confused about what you will be liable for. Book a meeting with an agent. The goal is to lower your potential cost as low as possible while still receiving great medical care when you need it and give you peace of mind.
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