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Tackling Medicare Part D Insurance Lingo

December 19th 2005

Tackling Medicare Part D Insurance Lingo

Medicare

Part D is an insurance policy; it is purchased from an insurance company, pure and simple! Although the government created the guidelines of the plan and pays the insurer about three times the amount that you pay, insurers are to follow the minimum rules or their actuarially equivalent.

Here are the terms that you need to understand. These terms may not be included in all plans, but many.

Insurer: The insurance companies that you will purchase your prescription drug plan from.

 

Formulary: A listing of the drugs covered by your insurance plan.

Co-Brand: Many insurance companies are using the plans of major health-specific insurers. So, this term just means other entities or companies that market the same plan.

Co-Pay: The fixed dollar amount that that you will pay for a prescription. Example (EX): $10 per a supply of a prescription.

Co-Insurance: Your share of the cost of a prescription, in the expression of a percentage of cost. EX: 32% per prescription.

Supplies of prescriptions: Depending on the insurer, a monthly supply may be considered 30 or 31 days. A multiple supply simply will be multiplied by the allotted number of months of said supply; the maximum is usually three times what is considered monthly: EX: A three-month supply of the above co-pay would be $30; the above co-insurance would be 32% of a three month supply.

Tiers: Are levels of cost for different drugs, depending upon the insurers formulary. When you purchase a policy, your monthly price is indicated, tiers do not affect this premium, you are included in all tiers. EX: A plan may offer drugs in tier 1 for $6 co-pay per monthly supply. Commonly, these are generic drugs. Tier 2 drugs may have a co-pay of $30; these usually are brand names and sometimes referred to as preferred brands. Tier 3 drugs might have a co-pay of $60; these usually are higher priced brand names and sometimes referred to as a non-preferred brand. Tier 4 might have a cost of 32% co-insurance; these may be referred to as specialty brands.

 

NOTE: Not all plans have 4 tiers. Most have fewer. I have seen as many as five or the insurer may have created a different cost of drug outline that may be referred to a generic, preferred brand and non-preferred brand, and or specialty brand. And others may simply express your cost of drug levels in co-insurance percentages. Most companies work with the tier method, but not all.

TOTAL OUT OF POCKET COST: It is difficult for those buying insurance policies to comprehend this category, but stay with me and hopefully it will become clear. Let us assume that one is insured to cover the first dollar to a total of $2,250 of prescription drug cost. This simply means that your insurer is paying this total amount, including the $250 deductible, for a calendar-year period. What most people don’t understand is that the total amount of the cost of the prescription is applied to your allotted amount. EX: Using the above figures, let us say you have a co-pay of $10 for drug A, and another drug that has a co-insurance of 32 percent for drug B. We shall assume that the retail price of A is $25 and B is $100. You would pay $10 for A and $32 for B. So, how much is deducted from your total? If you think $42, you would be wrong. The entire “retail” cost of the drugs, $125, will be deducted from your “pool of money,” or $2,250. Some insurers, but not many will pass their pre-negotiated pharmacy discounts to you.

STEP THERAPY: is a term used by some insurance companies, its meaning: If you are taking a certain drug or drugs, the insurer has the right to request that you attempt to use a different drug that treats the same medical condition, before it covers the drug that you requested.

Example: If Drug A and B both have the same benefits for your medical condition, you may be asked to take Drug B first. If Drug B does not provide you with the same medicinal benefit, then the insurer will allow you Drug A, your initially requested drug. Remember, always work closely with your physician, and make sure that he or she is aware of this request from the insurer.

QUANTITY LIMITS (QL): Many insurers will limit the amount of certain drugs that will be dispensed.

PRIOR AUTHORIZATION (PA): Many insurers will require that certain drugs need PA, if approval, by the insurer is not accepted, the drug will not be covered.

NOTE: Some insurers may require both PA and QA for certain drugs. You can always ask for a QL waiver; in fact, you may request a drug that is not within the insurers formulary, key word request.

PREFERRED PHARMACY: Most insurers will include a list of pharmacies that they “prefer” you to use.

NON-PREFERRED PHARMACY: A list of pharmacies that the insurer request that you do not use. In fact, if you do, you will usually have to pay an additional cost above your co-payment or co-insurance amount. Some exceptions apply, check with your plan.

NOTE: PPs and NPPs are sometimes referred to as in-network and out-of network.

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Centers for Medicare and Medicaid Services: (877) 267-2323 or the CMS website.

Medicare has a toll free number you can call to ask questions.  There phone number is 1-800-633-4227.  TTY users should call 1-877-486-2048.  You can visit official Medicare website here.

Medicare Part D
 

By Dan Rohan
Dan’s columns are currently published in a number of states, with a heavy concentration in central Florida. Dan is published somewhere 5 days per week; his column is published as “Senior Advocate” and syndicated as “Senior Focus.”  Contact Dan
Attention Editors: If your publication or Internet site would like to carry Dan's weekly column - Contact Dan for all Information. "Senior Focus" is also available to the general public - Contact Dan for info on a weekly e-mailed subscription basis.
 

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Copyright 2005 Best Syndication                                            Last Updated Saturday, July 10, 2010 09:47 PM