How Medicare Part D Plans Work

In our last posting we discussed the dreaded “Donut Hole”, provided some tips on how to avoid it and a few ideas on how to survive it if you do reach it. Today we are going to review the basic parts of Medicare Part D. Please remember that across the United States there are hundreds, if not thousands of possible combinations of insurance companies and plan designs. The most basic or model 2009 Medicare Part D plans are broken down into four main parts:

Part 1 – The initial $295 deductible – This is the annual amount you must spend on medicine before the insurance company will start paying. Some plans do not have an initial deductible and provide “first dollar coverage”.
Part 2 – Coverage – At this point, the plan provides the Medicare Part D Beneficiary with co-insurance or a co-pay per drug. Usually, coverage extends to a point where the total retail cost of the medication reaches $2700. This is the amount that you and the insurance company has spent on your medicine.
Part 3- The Coverage Gap or Donut Hole – This is where the Beneficiary pays 100% of their medication costs. Most plans do provide partial or complete coverage for generic drugs while you are in the donut hole.
Part 4 – Catastrophic Coverage – Once you have spent a total of $4350 for prescription medications out of your own pocket, you will be protected by Catastrophic Coverage, generally at 95% coverage.

As you can see, Medicare Part D can be quite confusing for most of us. My suggestion would be to seek as much guidence that you can and only deal with a local insurance agent that you know and trust.
Help for prescription costs is available from many different resources. It is important that you do your homework in advance however.

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