Options for Medicare Prescription Drug Coverage

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There are two ways to get Medicare prescription drug coverage:

  1. Medicare Prescription Drug Plans
    These plans (called PDPs) add drug coverage to Original Medicare.
  2. Medicare Advantage Plans (like an HMO or PPO)
    These sometimes 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 MA-PDs. 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.

Out-of-Pocket Expenses

Yearly Deductibles

Similar to health insurance, you will probably pay a certain amount before your drug plan begins to pay its share of your covered drugs. Some drug plans don't have a deductible.

Co-Payments or Coinsurance

Even after you've paid the deductible, you may be responsible for a portion of your covered prescription drugs. You pay your share and your drug plan pays its share for covered drugs.

Coverage Gap

Most Medicare drug plans have a coverage gap (also called the "donut hole"). This means that there is a temporary limit on what the drug plan will cover for drugs. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Not everyone will enter the coverage gap.

The following items all count toward you getting out of the coverage gap:

  • Your yearly deductible, coinsurance, and co-payments
  • The discount you get on brand-name drugs in the coverage gap
  • What you pay in the coverage gap

The drug plan premium and what you pay for drugs that aren't covered don't count toward getting you out of the coverage gap.

There are plans that offer additional coverage during the gap, like for generic drugs. However, plans with additional gap coverage may charge a higher monthly premium. Check with the drug plan first to see if your drugs will be covered during the gap.

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