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How much will my drug coverage cost?
Your costs for Medicare prescription drug coverage will vary depending on which drugs you use, which Medicare drug plan you join, and whether you get extra help paying for your drug costs. Medicare drug plans may design their plans with different coverage and costs, as long as what their plan offers is at least as good as the standard coverage described on the next page.
Contact the plan(s) you are interested in to get specific cost information.
Medicare prescription drug coverage is insurance.
Payments you may make in a Medicare drug plan include the following:
- Monthly premium —Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B premium. If you belong to a Medicare Advantage Plan or Medicare Cost Plan that includes Medicare drug coverage, the monthly premium you pay includes an amount for prescription drug coverage. Some drug plans charge no premium.
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- Yearly deductible —This is the amount you pay for your prescriptions before your plan begins to pay. Some plans charge no deductible.
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- Copayments or coinsurance —You pay these amounts for your prescriptions after the deductible. You pay your share and your plan pays its share for covered drugs.
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- Coverage gap—Most Medicare drug plans have a coverage gap. This means that after you and your plan have spent a certain amount of money for covered drugs, you have to pay all costs for your drugs while you are in the coverage gap. You must also continue to pay your plan’s monthly premium while you are in the coverage gap.
Each state offers at least one plan with some type of coverage during the gap. However, it’s important to note the following:
- Plans with gap coverage may charge a higher monthly premium.
- Some plans may offer only generic drug coverage during the gap.
- Even if a plan offers gap coverage, check with the plan first to see if your drugs would be covered in the gap.
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- Catastrophic coverage—If you have extremely high drug costs, Medicare drug plans provide coverage called "catastrophic coverage." This means that once you have paid up to a certain limit for covered drugs in 2008, you only pay a coinsurance amount (like 5% of the drug cost) or a copayment (like $2.25 or $5.60 for each prescription) for the rest of the calendar year.
Note: If you get extra help paying your drug costs, some or all of your monthly premium may be covered, and you won’t have a coverage gap. However, you will probably have to pay a small copayment or coinsurance amount for each prescription.
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The example below shows calendar year costs for covered drugs in a plan that meets Medicare’s standards in 2008:
Mr. Jones joins the ABC Prescription Drug Plan. His coverage begins on January 1, 2008. He pays the plan a monthly premium throughout the year, even during his coverage gap. He doesn’t get extra help and uses his Medicare drug plan membership card.
1. Yearly deductible
-----> |
2. Copayment / Coinsurance
-----> |
3. Coverage Gap
-----> |
4. Catastrophic Coverage |
| Mr. Jones pays the first $275 of his drug costs. |
Mr. Jones pays a copayment or coinsurance amount for each prescription, and his plan pays its share for each drug until his total drug costs (including his deductible) reach $2,510. |
Mr. Jones pays everything until he has spent $4,050 out-of-pocket.
This amount includes his yearly deductible, his coinsurance or copays, and what he pays while in the coverage gap. This doesn’t include the drug plan’s premium. |
Once Mr. Jones has spent $4,050 out-of-pocket for the year, his coverage gap ends. Now he only pays a small coinsurance (like 5%) or a small copayment (like $2.25 or $5.60) for each prescription until the end of the year. |
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(Primary Source: Centers for Medicare and Medicaid Services - Your Guide to Medicare Prescription Drug Coverage 2008. This content may have been added upon by Q1Group LLC to include further examples, explanations, and links.)
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Last updated on: 10/14/2012
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