This publication explains how Medicare prescription drug coverage works, how to get extra help paying for Medicare prescription drug coverage, and how it may affect any current coverage people have.

Medicare prescription drug coverage is insurance
Medicare prescription drug coverage (Part D) is coverage that adds to, or is included with, your Medicare health care coverage. It helps you pay for both the brand-name and generic drugs you need. Medicare drug plans are offered by insurance companies and other private companies approved by Medicare.

There are two ways to get Medicare prescription drug coverage:

• Medicare Prescription Drug Plans (sometimes called PDPs) add prescription drug coverage to Original Medicare, some Medicare Private Fee-for-Service (PFFS) Plans, some Medicare Cost Plans, and Medicare Medical Savings Account (MSA) Plans.
• Medicare Advantage Plans (like an HMO or PPO) or other Medicare health plans that offer prescription drug coverage. You generally get all of your Medicare Part A (Hospital Insurance), Medicare Part B (Medical Insurance), and Part D coverage through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.”

We use the term “Medicare drug plans” throughout this booklet to mean all plans that provide Medicare prescription drug coverage. You must choose and join a Medicare drug plan to get Medicare prescription drug coverage.

Download Your Guide to Medicare Prescription Drug Coverage

PDF format, 1MB, 76Pages.

U.S. DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
7500 Security Boulevard
Baltimore, Maryland 21244-1850

This official government booklet tells you the following:

• How it works
• How to get extra help paying for drug coverage if you have limited income and resources
• How it may affect any current drug coverage

CONTENTS
5 Medicare Prescription Drug Coverage Basics
9 How Medicare Prescription Drug Coverage Works
25 How to Get Extra Help With Your Medicare Drug Plan Costs
37 Your Prescription Drug Coverage Choices
55 Steps to Choosing a Medicare Drug Plan
59 Your Medicare Drug Plan Rights and Appeals
67 For More Information

WORDS TO KNOW
Coinsurance—An amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%).

Copayment—An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit or prescription. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription.

Coverage Determination—The first decision made by your Medicare drug plan (not the pharmacy) about your drug benefits, including the following:

• Whether a particular drug is covered
• Whether you have met all the requirements for getting a requested drug
• How much you’re required to pay for a drug
• Whether to make an exception to a plan rule when you request it

If the drug plan doesn’t give you a prompt decision, and you can show that the delay would affect your health, the plan’s failure to act is considered to be a coverage determination. If you disagree with the coverage determination, the next step is an appeal.

Creditable Prescription Drug Coverage—Prescription drug coverage (for example, from an employer or union) that is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage later.

Deductible—The amount you must pay for health care or prescriptions, before Original Medicare, your prescription drug plan, or your other insurance begins to pay.

Drug List—A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. This list is also called a formulary.

Exception—A type of Medicare prescription drug coverage determination. A formulary exception is a drug plan’s decision to cover a drug that’s not on its formulary or to waive a coverage rule. A tiering exception is a drug plan’s decision to charge a lower amount for a drug that is on its non-preferred drug tier. You must request an exception, and your prescriber must send a supporting statement explaining the medical reason for the exception.

Extra Help—A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, such as premiums, deductibles, and coinsurance.

Institution—For the purposes of this publication, an institution is a facility that provides short-term or long-term care, such as a nursing home, skilled nursing facility (SNF), or rehabilitation hospital. Private residences, such as an assisted living facility or group home, are not considered institutions for this purpose.

Medicaid—A joint Federal and state program that helps with medical costs for some people with limited income and resources. Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.

Medically Necessary—Services or supplies that are needed for the diagnosis or treatment of your medical condition and meet accepted standards of medical practice.

Medicare Advantage Plan (Part C)—A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you are enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan and aren’t paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage.

Medicare Cost Plan—A type of Medicare health plan available in some areas. In a Medicare Cost Plan, if you get services outside of the plan’s network without a referral, your Medicare-covered services will be paid for under Original Medicare (your Cost Plan pays for emergency services or urgently-needed services).

Medicare Health Maintenance Organization—A type of Medicare Advantage Plan (Part C) available in some areas of the country. In most HMOs, you can only go to doctors, specialists, or hospitals on the plan’s list except in an emergency. Most HMOs also require you to get a referral from your primary care physician.

Medicare Medical Savings Account (MSA) Plan—MSA Plans combine a high deductible Medicare Advantage Plan and a bank account. The plan deposits money from Medicare into the account. You can use the money in this account to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount so you generally will have to pay out-of-pocket before your coverage begins.

Medicare Preferred Provider Organization (PPO) Plan—A type of Medicare Advantage Plan (Part C) available in some areas of the country in which you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

Medicare Prescription Drug Plan (Part D)—A stand-alone drug plan that adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.

Medicare Private Fee-for-Service (PFFS) Plan—A type of Medicare Advantage Plan (Part C) in which you can generally go to any doctor or hospital you could go to if you had Original Medicare, if the doctor or hospital agrees to treat you. The plan determines how much it will pay doctors and hospitals, and how much you must pay when you get care. A Private Fee-For-Service Plan is very different than Original Medicare, and you must follow the plan rules carefully when you go for health care services. When you’re in a Private Fee-For-Service Plan, you may pay more, or less, for Medicare-covered benefits than in Original Medicare.

Medigap Policy—Medicare Supplement Insurance sold by private insurance companies to fill “gaps” in Original Medicare coverage. Some Medigap policies sold before January 1, 2006, have prescription drug coverage. Policies sold on or after January 1, 2006, don’t have prescription drug coverage.

Original Medicare—Original Medicare is the fee-for-service plan under which the government pays your health care providers directly for your Part A and/or Part B benefits.

Penalty—An amount added to your monthly premium for Medicare Part B or a Medicare drug plan (Part D), if you don’t join when you’re first eligible. You pay this higher amount as long as you have Medicare. There are some exceptions.

Premium—The periodic payment to Medicare, an insurance company, or a health care plan for health or prescription drug coverage.

State Health Insurance Assistance Program (SHIP)—A state program that gets money from the Federal government to give free local health insurance counseling to people with Medicare.

State Pharmacy Assistance Program (SPAP)—A state program that provides help paying for drug coverage based on financial need, age, or medical condition.

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