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Retirement & Medicare Part D

What to know about Part D

Trying to figure out Part D after retiring or right before you retire can be a little confusing. Medicare Part D is the portion of Medicare that helps cover prescription drug costs. These individual plans are regulated by Medicare, but administered and run by private insurance companies across the United States. Just because a plan is offered in one state does not mean that it has to be filed or offered in another state. Typically, premiums will vary by state but the plan’s benefits will stay parallel across the country.

For example: Humana may have a Mississippi Part D Enhanced plan for $14 a month where it will have Tennessee Part D Enhanced plan for $27 a month. Premiums can vary but benefits are usually consistent.

These Part D plans change a little bit every year, so make sure to review your coverage and see if it is the best option for you during the upcoming year. The typical annual election period is October 1st 2011 – December 7th 2011.

What do Plan Designs look like?

Usually an insurance company like Humana, SilverScript, Universal American, etc will come out with 2 or 3 plans in each state. There is usually a low, medium and high premium option. Most plans have 4 tiers inside each plan:

  1. Deductible
  2. Initial Coverage Period
  3. Coverage Gap (Also known as the Donut Hole)
  4. Catastrophic Coverage

Understand that just b/c a plan has low premium or high premium it does not mean it is the best plan for you. There are many things to consider like the formulary for the Part D plan (drugs covered), what pharmacies accept the plan, and what your overall cost will be throughout the year. I personally look at the overall cost throughout the year as well as the prescriptions covered to find out which plan I would want to be enrolled in.

What is the Donut Hole?

The donut hole is another name for the “Coverage Gap” in a Medicare Part D plan. No one likes to be in the donut hole because this is the portion of the plan where you still have to pay premiums, but the insurance company does not contribute to any of your prescription drug costs. Before you get mad at the insurance companies this is what they have to do because these plans are regulated by the federal government and that is how they were set up.

In 2011, the coverage in the donut hole was changed. Now preferred brand drugs will be subsidized 50% in the donut hole and a little more every year until 2020. This means that the drug that was costing you $100 during the Part D Coverage Gap is now only going to cost you $50. You may be complaining that you still have to pay $50, but this is a much better than having to pay the full price.

Part D Summary

Again, Medicare Part D is a program run by private insurance companies to help you cover your prescriptions when you are on Medicare. These plans change every year and can be different state to state so review your options annually at the end of the year.

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