Arkansas Blue Cross and Blue Shield
Medicare 101 Video Series
“Medicare Prescription Drug Plans”
If you are like many people on Medicare, you rely on prescription medications to maintain your health. And, even if you are fortunate enough not to require prescription drugs now, you realize you may need them in the future. Considering the high cost of prescription drugs these days, most people on Medicare want prescription drug coverage.
A Medicare Prescription Drug Plan – often called a PDP – is the portion of Medicare known as Part D. You don’t automatically get Medicare Part D coverage when you sign up for Medicare Parts A and B (also known as Original Medicare). Prescription Drug Plans work like many other insurance plans. Typically, you pay a portion of your prescription drug costs and the health insurance plan pays the rest.
With all PDPs, coverage is provided in three levels. In Level 1, many PDPs require that you meet a deductible before the plan begins to pay benefits. Once the deductible is met, you will pay a portion of the cost of the prescription drug either as a copayment or coinsurance. You continue to share the cost of your prescriptions by paying copayments or coinsurance until your total cost reaches a certain dollar limit.
When you’ve reached this limit, your coverage moves to Level 2. This level has become known as the “coverage gap” or “donut hole.” While there are some plans that cover the cost of generic drugs while you’re in Level 2, with many plans, you are required to pay a portion of your prescription drug costs until you reach another limit set by the federal government. You often will hear this “limit” referred to as the TrOOP. TrOOP is an acronym for True Out-Of-Pocket Costs. TrOOP is your total amount of out-of-pocket costs from Level 1 plus your out-of-pocket costs from Level 2.
When you’ve reached your TrOOP, you move to Level 3. Here, your out-of-pocket costs are minimal. In Level 3, you’ll pay predictable copayments or coinsurance for your prescription medications and the plan will pay the balance.
Medicare contracts with private insurance companies, such as Arkansas Blue Cross, to sell Medicare-approved Prescription Drug Plans. PDPs only are available from private insurance companies. To enroll in a PDP, you must be entitled to Medicare Part A or enrolled in Part B, and you must live in the health insurance company’s service area. You may purchase a Part D plan — PDP — regardless of any health conditions you may have.
Many people choose to buy a PDP during the period the federal government calls the Initial Enrollment Period. This is the time period leading up to and just following your 65th birthday. This is the same time you sign up for Medicare Parts A and B. The Initial Enrollment Period lasts 7 months. It begins three months before you turn 65, includes the month of your birthday, and ends three months after your birthday month. You can buy a PDP — or Medicare Part D plan — any time during the Initial Enrollment Period. Your benefits will become effective on the first day of your birthday month if you sign up early. Or, on the first day of the following month if you enroll after your birthday.
Many people plan to continue working after age 65 and will have good prescription drug coverage through their employer — or a spouse’s employer. The employer is required to provide you with documentation telling you if your group prescription drug coverage is equal to or better than Medicare Part D. If the employer’s coverage is “as good” as the coverage offered through Medicare Part D, you may choose to delay buying a PDP.
If you miss enrolling in a PDP during your Initial Enrollment Period, the government will charge you a small penalty — unless you can show you had prescription drug coverage that was as good or better than Medicare Part D. If you do not enroll during your Initial Enrollment Period, you can enroll in a PDP during the Annual Election Period from October 15th through December 7th. However, your coverage will not become effective until the following January 1st. So you could be without drug coverage for a period of time.
There are opportunities in which you can enroll in a PDP after your Initial Enrollment Period without penalty and without waiting for the Annual Election Period. These are called Special Enrollment Periods. An example is: If you retire from active employment and no longer have group drug coverage. We advise people on Medicare to enroll in a PDP when they are first eligible. Remember, Medicare Parts A and B do not cover prescription drugs, nor do Medicare Supplement Plans or some Medicare Advantage Plans.
Adding a PDP to a Medicare supplement plan or Medicare Advantage plan that does not already include prescription drug coverage is an important part of preparing for your health care as you turn 65. Even if you only have Original Medicare, you still can enroll in a PDP. To choose the PDP that’s right for you, you should consider the premium cost, the benefits you get for that cost, whether or not your prescriptions are on the health insurance plan’s drug list, and the service you will receive from the insurance company you choose.
One of the knowledgeable representatives at Arkansas Blue Cross can help you evaluate the PDP that works best for you. We’ll walk you through the process of understanding your choices and when to enroll. We want you to have the peace of mind that comes from knowing your medications will be covered when you need them and at a price you can afford. Our representatives are available to help answer any additional questions you may have about Medicare PDPs. Ask us today.