Medicare Drug Cover Center:
Frequently Asked Questions about the Drug Benefit
1. Will all drug plans offer the same benefit?
Not necessarily. Every plan has to offer Medicare's "basic benefit" or something that is of equal value to the basic benefit. The basic benefit in 2006 has out-of-pocket costs as follows:
- A $250 deductible (you pay the first $250 in drug costs);
- After that, you pay 25 percent of the cost of each prescription and the plan pays 75 percent of the cost until your drug costs for the year reach $2,250 (that's what you've paid plus what the plan has paid);
- After your drug costs for the year reach $2,250, you pay all of your drug expenses for the rest of the year unless you spend $3,600 of your own money on prescription drugs, in which case you get catastrophic coverage for the rest of the year (this gap in coverage is also called "the doughnut hole");
- If you qualify for catastrophic coverage, the plan picks up most of the cost of your prescription drugs for the rest of the year.
After 2006: Every year, you start over with a new deductible, and you will have to qualify for catastrophic coverage all over again. And every year the deductible, initial coverage limit, and amount you have to pay to qualify for catastrophic coverage will go up at the same rate as Medicare's drug costs.
Plans can vary the "basic benefit" by having different out-of-pocket costs (cost-sharing) on different drugs, as long as the value of the total benefit is considered the same as the "basic benefit."
In addition, each organization that offers a drug benefit through Medicare can offer several plans that vary in their levels of coverage and costs as long as they offer at least one plan that is equal to the "basic benefit." So, companies can offer some plans that are better, but they will probably cost you more. This is because, in addition to what you have to pay in drug costs, you'll have to pay the plan premium as well.
2. Is there added help for people with limited resources?
Yes. People with both Medicare and Medicaid automatically qualify for added help. So do people who get some assistance from Medicaid to cover part of their Medicare costs (such as help paying Medicare premiums). Others with limited incomes and assets can qualify for added help. The level of help provided by Medicare will vary according to a person's income, assets, and Medicaid status. For more information about the low-income subsidy (“extra help”), click here.
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3. What drugs will Medicare pay for?
The Medicare drug benefit will pay for most FDA approved outpatient prescription medicines. This includes drugs that states are required to pay for in their Medicaid drug programs plus insulin supplies, smoking cessation drugs, and vaccines. The drug benefit does not cover drugs that are optional in Medicaid (which includes a class of tranquilizers called benzodiazepines like valium, as well as weight loss drugs), drugs that are paid for by Medicare's hospital benefit (Medicare Part A), or drugs that are paid for by Medicare's physician benefit (Medicare Part B).
Individual drug plans do not have to cover all the drugs that Medicare covers—they can develop their own lists of covered drugs.
4. What drugs will the drug plans cover?
Every drug plan is able to develop its own list of drugs that it will cover. These are the only drugs that the plan has to pay for. What's more, only the cost of drugs the plan covers will count towards your out-of-pocket payments, and only those out-of-pocket payments qualify you for catastrophic coverage.
There are some requirements, however, for which drugs plans have to cover. Plans have to cover two drugs in each "therapeutic class" (Medicare has defined these therapeutic classes for plans). Plans cannot opt to cover only generics, for example. In six classes, including HIV/AIDS drugs, plans have to cover nearly all drugs that have been approved by the FDA.
5. Can drug plans change the drugs they cover?
Yes. Drug plans can change the drugs they cover during the course of a year. There are some limits, however:
- Plans cannot change their drug list from the start of the open enrollment period (November 15) until 60 days after the end of open enrollment (60 days after January 1). So, generally, a plan cannot change its covered drugs from December through February.
- After that, plans can change the list of drugs they cover at any time as long as they give 60 days' prior notice to physicians, pharmacists, and the patients who are taking a drug that will be affected by the change.
- "Changes" a plan can make include taking a drug off the list of covered drugs or changing a drug's cost-sharing (the percent you have to pay for each prescription) or placing a drug on a different cost-sharing "level" (meaning you will have to pay more money out of pocket.
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6. What if my plan changes coverage for the drugs I take?
If your plan changes coverage for the drugs you take, you can ask your doctor if you can switch to a different drug that is covered by your plan. If your doctor says that you do need that specific drug, you can file an appeal with the plan to see if you can continue to get that drug.
7. How do I file an appeal?
All plans are required to have an appeals process. If you want to file an appeal, you should check with your plan about how to do so. You or your physician can file the appeal.
8. What if I fill some prescriptions for drugs my plan doesn't cover and pay for those myself?
You can do that, but the amounts you pay for drugs your plan doesn't cover will not count toward your out-of-pocket payments. These payments are used for calculating when you qualify for catastrophic coverage. This is true even if you're in the coverage gap ("doughnut hole") and paying all the costs of your drugs. If you want the amounts you pay for drugs to count toward catastrophic coverage, you still have to stick with your plan's list of covered drugs.
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9. What if no plan in my area covers all the drugs I take now?
If you take a lot of different drugs, you may find that no plan in your area covers all the drugs you take. In that case, you should try to enroll in the plan that covers as many of your drugs as possible. Also, plans are required to have "transition benefits"—a process to help patients who are taking drugs that the plan doesn't cover. So, you should contact the plans that seems the best fit for you, see what their transition process is, and see if it would apply to your situation. You should also talk to your doctor and see if you can switch some of your medication so that you'll have coverage for everything you need.
10. Can plans place any other limits on the drugs I take?
Yes. Plans can require that you get pre-approval from the plan (also known as prior-authorization) before the plan will pay for certain medicines. Plans can also require that you try certain drugs before they will approve you for other therapies. Before you enroll in a plan, you should check to see if there are any restrictions on the drugs you take now.
11. Are drug prices the same for every plan?
No. Each company that participates in the program will negotiate directly with drug manufacturers to get discounts on the drugs they buy. Plans are required to pass along some of the discounts they get to enrollees. But both the discounts that different plans can get and the amounts they are willing to pass along to people with Medicare will probably vary. So, it is likely that a drug's price will be different from one plan to another. This means that, when you're picking a plan, you'll not only need to look at premiums and what drugs a plan covers, but also at the prices of those drugs.
For drugs that the plans covers, you will get the discounted price, even if you're in the "doughnut hole" and paying 100 percent of the prescription cost.
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12. Can I go to any pharmacy to fill my prescriptions?
Probably not. Plans will create pharmacy networks, and you will be able to go only to a pharmacy that is in the plan's network. Also, some pharmacies in the network may be "preferred," meaning that you'll pay less if you use those pharmacies. Before you sign up with a plan, you should check to make sure that the pharmacy that you want to use, or one that is convenient, is on your pharmacy network list.
13. How can I decide if the benefit will help me?
You need to evaluate your drug costs against the cost of the plan (the monthly premium plus other out-of-pocket costs you'll have to pay). But remember, if you don't sign up for the benefit right away and your situation changes and you decide you need drug coverage, you're premium will be increased by one percent for each month you've gone without coverage. In evaluating whether to sign up or not, you might want to talk to your area State Health Insurance Program.
14. How can I decide which plan is best for me?
There are a lot of things you'll need to consider when choosing a plan, and you might want to contact your area State Health Insurance Program to help you decide.
Here are some of the things you should consider:
- The plan's premium;
- Whether the plan covers the drugs you take;
- Whether there are any restrictions on the drugs you take, such as requirements that you obtain pre-approval for any of the drugs you need;
- How much you'll have to pay for each prescription (your copayment or co-insurance rate for the drugs you take);
- The plan's price for the drugs you take;
- How much you would have to pay for the drugs if you paid for them on your own;
- Whether the pharmacy you want to use is in the plan network and whether it's a preferred pharmacy; and
- Any available information on the plan's reputation or history of serving people who are not in Medicare.
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15. Will the benefit change from year to year?
Yes. Every year, Medicare's "basic benefit" will change. The deductible, the initial amount of drug charges the plan will cover (after which the plan stops helping with drug costs), and the amount that you'll have to pay to qualify for catastrophic coverage will all increase. So, if Medicare drug costs go up 10 percent in the first year, what you'll have to pay to qualify for catastrophic coverage will increase by 10 percent as well (from $3,600 to $3,960).
In addition, plans can change their lists of covered drugs and can impose other restrictions, such as changing the drugs that require prior-authorization.
16. How would I qualify for catastrophic coverage?
Whether you qualify for catastrophic coverage is based on how much of your own money you spend on prescription drugs in a given year (your out-of-pocket payments). Catastrophic coverage only lasts until the end of a year. Here are the basic rules for qualifying for catastrophic coverage:
- Only the amounts paid for drugs that are covered by your plan count—if you purchase drugs that your plan doesn't cover, the amounts that you pay won't help qualify you for catastrophic coverage.
- Generally, only amounts that you pay with your own funds will count. Amounts paid by other insurance generally won't count toward your out-of-pocket payments.
- There are exceptions to these rules: assistance that you get from charities, manufacturer patient assistance programs, qualified State Pharmacy Assistance Programs, or from Health Savings Accounts can count toward your out-of-pocket payments. Some other programs, like state AIDS Drug Assistance Programs, can help with costs during your deductible.
17. What happens to the Medicare drug discount card?
The discount card program ends when the drug benefit starts on January 1, 2006
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