Medicare Part D
Medicare is the government program that provides health care benefits primarily to people age 65 or over. It also covers those who are disabled and receiving Social Security and those with certain medical conditions.
Starting January 1, 2006, Medicare has made a basic drug benefit (Part D) available to all Medicare participants.
Rather than providing this coverage directly, Medicare is contracting with private entities, such as commercial insurance companies, pharmacy benefit managers and employer health plans (like NRECA).
How Medicare’s Standard Part D Plan Works
Most commercial plans offer a plan based on the Medicare's standard plan. You pay a premium each month to be covered by a Medicare prescription drug plan, plus costs for covered prescription drugs.
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In addition to your monthly premium, you pay a share of the cost when using your benefit each year:
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You pay
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Plan pays
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| First, you pay the annual deductible. The deductible changes every year. For 2009, the annual deductible is $295. |
$295 |
$0 |
| Next, you pay 25% of the cost—the coinsurance—between the annual deductible and the initial coverage limit. For 2009, the initial coverage limit is $2,700, so you pay 25% of the cost for the next $2,405 in covered drugs. |
$601.25 |
$1,803.75 |
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At this point, you reach the initial coverage limit. You now move into the coverage gap.
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Subtotal
$896.25
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Subtotal
$1,803.75
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| While in the coverage gap, you pay 100% of the cost for covered drugs until you reach the maximum in true out-of-pocket costs or TrOOP. For 2009, the TrOOP is $4,350, so you pay the full cost for the next $3,453.75. |
$3,453.75 |
$0 |
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At this point, you reach the maximum in true out-of-pocket (TrOOP) costs. You are now eligible for catastrophic coverage.
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Total
$4,350
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Total
$1,803.75
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| You pay the greater of 5% of the cost of covered drugs or a minimum copayment for generic, brand name or specialty drugs—this is the catastrophic coverage. For 2009, the minimum copayment is $2.40 for generic drugs and $6.00 for brand name or specialty drugs. |
5%
No limit |
95%
No limit |