Understanding Medicare Prescription Drug Coverage

The new year brought on many changes in health reform; employers are decreasing their contribution to higher premiums and increasing the employee’s share, and Medicare has changed the way certain expenses are reimbursed. The net affect may hit our pocketbooks a little hard this year and for many it’s a hardship just to keep up with the cost of living. One area that may bring relief for those on Medicare is a reduction in the cost of prescription medicine, especially for those who have large expenditures each year.

Remaining the same as in 2010, there are two choices for prescription drug plans; supplemental plans working to fill the gap between Medicare and actual costs. At open enrollment, the consumer can decide which coverage to use, or whether to use a drug plan at all. The choices are the Medicare prescription drug plan or Medicare Advantage (MA). These plans have various premiums amounts based on the retiree’s annual income. With all the changes made to Medicare this year, it is difficult to understand certain areas such as the prescription plan changes; however, the Medicare website (www.medicare.gov) is very helpful when choosing the types of coverage desired.

An aspect that changed, within those two plans in 2011, is how spending affects the doughnut hole. (The doughnut hole occurs when deductibles are met and prior to catastrophic insurance kicking in.) This year the pharmaceutical companies will discount brand name drugs by 50%, thereby reducing out of pocket costs to the participant. Lawmakers are hopeful the changes will benefit those who reach the doughnut hole threshold early in the year. In the past, once the doughnut hole period began the insured participant paid 25% of drug costs and remained in the doughnut hole until the catastrophic plan was available. Now with the pharmaceutical’s help, the insured will only pay 50% of the cost. In addition, there is no longer a $10 co-pay and $310 deductible. Sounds like a neat little package all tied up and easy to understand. It would be except there are some confusing caveats that affect how and when costs are reimbursed. The consumer can find helpful Medicare articles and handbooks, blogs, FAQs, toll-free help, and calculators on the Medicare website to decide which plan is best for them and what they might spend on prescriptions in 2011.

There are others ways to save on prescription drugs. The consumer may ask their doctor to prescribe generic drugs or a cheaper drug that will still meet the requirements. For maintenance drugs, try the three-month mail-in plans, which are generally cheaper. And for those who are low income, there are assistance programs such as State Pharmaceutical Assistance Programs (SPAP), community and faith based programs, and some pharmaceutical manufacturers offer deeper discounts to low income families to help with the costs.