What to look for when comparing Medicare Part D Plans
October 24th 2005

Medicare Part D may not be right for everyone, but it is important to determine if it is right for you.  You could end up paying large sums out of pocket if you opt not to join or join the wrong plan.

Basically, the Administration wanted to put some competition into the Insurance / Medicare market.  Insurance providers submit prescription coverage plans that vary in cost and medication coverage.  You should be careful and choose the plan that best suits your needs. 

Premiums

The Federal Government has set minimum guidelines for insurance companies that want to participate in Part D coverage.  Some insurers will exceed the minimum.  Part D requires recipients to pay an insurance premium, just like any insurance plan.  Premiums are likely to cost between $15 and $45 per month.

Deductibles

Part D will require a $250 out of pocket deductible from recipients.  After paying your premium you are required to pay at least $250 toward a yearly deductible.  It is important to make sure your chosen plan covers your drugs otherwise you could end up paying for the drug yourself.

Co-pay

After the premiums and deductibles are paid, there will likely be a co-pay payment required on the medication.  Medicare Part D recipients are required to pay 25% of all the prescription needs until the total cost of everything reaches $2,250. 

Let’s run some numbers

So if your plan requires you to pay $20 per month your total premiums would be 12 X $20 or $240 per year.  Then add the deductible you must pay before your coverage kicks in of $250.  The total so far would be $490 for the year. 

After that you are required to pay 25% of the cost of medication up to $2,250.  The $2,250 includes your potion and the insurance company’s portion of the drug coverage combined.  $2,250 - $490 = $1760 left over after the premiums and deductibles are paid.  Remember that is if the premium was $20 per month.

Twenty five percent of $1760 is $440.  You will need to pay that $440.  So if your total cost of drugs would be $490 + $440, or $930. 

The Donut hole

After the first $2,250 (that was $930 out of pocket for the recipient in the example above) recipients are required to pay the next $2,850 for their drugs.  That includes prescription medications covered and not covered by the Medicare plan.

After the beneficiary has paid a total of $3.600 out-of-pocket, they will pay either 5% of the total cost of the medication or $5 for name brand drugs and $2 for generic. The recipient pays whichever is lower: 5% or $5 for name brands or $2 for generics. 

The Feds call medication cost in excess of $3,600 “catastrophic”. Not all insurance plans will have a “donut hole”.  Some plans will continue to cover prescription drug costs even after the first $2,250.     

By Dan Wilson
Best Syndication Staff Writer

Medicare Books

Keywords and misspellings:  Medicare Medecare Medicair Medicaire plan d