How does Medicare prescription drug coverage (Part D) work?

To get Medicare prescription drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare.  Each plan can vary in cost and specific drugs covered.

There are 2 ways to get Medicare prescription drug coverage:

1.      Medicare Prescription Drug Plans.  These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.

2.      Medicare Advantage Plans (like an HMO or PPO) or other Medicare health plans that offer Medicare prescription drug coverage.  You get all of your Part A and Part B coverage, and prescription drug coverage (Part D), through these plans.  Medicare Advantage Plans with prescription drug coverage are sometimes called “MAPDs.”  You must have Part A and Part B to join a Medicare Advantage Plan.

In either case, you must live in the service area of the Medicare drug plan you want to join.  

 

*Source:  Centers for Medicare & Medicaid Services, “Medicare & You 2013”, p. 87

 

(Click on picture below to view 2014 Medicare Part D Chart.)

2014 Medicare Part D plans have out of pocket costs for members in the initial coverage level, doughnut hole (coverage gap) level, and the catastrophic coverage level. This chart provides the out of pocket amounts for the member for each coverage level.