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The 2012 Medicare Part D Prescription Drug Program

Below are the details for the 2012 Standard Benefit Model Plan, released by the Centers for Medicare and Medicaid Services (CMS) April, 2011.

:: CMS Part D 2012 Standard Benefit Model Plan Details
:: Tools to find a Medicare Prescription Drug Plan
:: Brand Drug Coverage Gap Discount Program
:: Reduced Cost sharing for Generic Drugs in the Coverage Gap
:: LIS Benchmarks - lack of qualifying plans

CMS Part D 2012 Standard Benefit Model Plan Details

Here are the highlights for the Centers for Medicare and Medicaid Services (CMS) defined Standard Benefit Plans for 2008, 2009, 2010, 2011 and 2012. This "Standard Benefit Plan" is the minimum allowable plan to be offered.
  • Initial Deductible:
    will be increased by $10 to $320 in 2012
  • Initial Coverage Limit:
    will increase from $2,840 in 2011 to $2,930 in 2012
  • Out-of-Pocket Threshold:
    will increase from $4,550 to $4,700 in 2012
  • Coverage Gap (donut hole):
    begins once you reach your Medicare Part D plan’s initial coverage limit ($2,930 in 2012) and ends when you spend a total of $4,700 in 2012.
    In 2012, Part D enrollees will continue receive a 50% discount on the total cost of their brand-name drugs while in the donut hole. The full retail cost of the drugs will still apply to getting out of the donut hole even though 50% was paid for by the pharmaceutical manufacturers. Enrollees will pay a maximum of 84% co-pay on generic drugs while in the coverage gap.
  • Minimum Cost-sharing in the Catastrophic Coverage Portion of the Benefit**:
    will increase to greater of 5% or $2.60 for generic or preferred drug that is a multi-source drug and the greater of 5% or $6.50 for all other drugs in 2012
  • Maximum Co-payments below the Out-of-Pocket Threshold for certain Low Income Full Subsidy Eligible Enrollees:
    will increase to $2.60 for generic or preferred drug that is a multi-source drug and $6.60 for all other drugs in 2012
                                Click here to see a comparison of plan parameters for all years since 2006
Medicare Part D Benefit Parameters for Defined Standard Benefit
2008 through 2012 Comparison
Part D Standard Benefit Design Parameters: 2012 2011 2010 2009 2008
Deductible - (after the Deductible is met, Beneficiary pays 25% of covered costs up to total prescription costs meeting the Initial Coverage Limit. $320 $310 $310 $295 $275
Initial Coverage Limit - Coverage Gap (Donut Hole) begins at this point. (The Beneficiary pays 100% of their prescription costs up to the Out-of-Pocket Threshold) $2,930 $2,840 $2,830 $2,700 $2,510
Total Covered Part D Drug Out-of-Pocket Spending including the Coverage Gap - Catastrophic Coverage starts after this point.

See note (1) below.
$6,657.50 (1)

plus a 50% brand discount
$6,447.50 (1)

plus a 50% brand discount
$6,440.00


plus a
$250 rebate

$6,153.75 $5,726.25
Out-of-Pocket Threshold - This is the Total Out-of-Pocket Costs including the Donut Hole.
2012 Example:
   $320 (Deductible)
+(($2930-$320)*25%) (Initial Coverage)
+(($6657.50-$2930)*100%) (Cov. Gap)
= $4,700 (Maximum Out-Of-Pocket Cost prior to Catastrophic Coverage - excluding plan premium)
$4,700



$320.00
$652.50

$3,727.50

$4,700.00



$4,550



$310.00
$632.50

$3,607.50

$4,550.00



$4,550



$310.00
$630.00

$3,610.00

$4,550.00



$4,350



$295.00
$601.25

$3,453.75

$4,350.00



$4,050



$275.00
$558.75

$3,216.25

$4,050.00



Total Estimated Covered Part D Drug Out-of-Pocket Spending including the Coverage Gap Discount (NON-LIS) See note (2). $6,730.39 $6,483.72      
Catastrophic Coverage Benefit:
   Generic/Preferred
   Multi-Source Drug
(3)
$2.60 (3) $2.50 (3) $2.50 (3) $2.40 (3) $2.25 (3)
    Other Drugs (3) $6.50 (3) $6.30 (3) $6.30 (3) $6.00 (3) $5.60 (3)
Part D Full Benefit Dual Eligible (FBDE) Parameters: 2012 2011 2010 2009 2008
   Deductible $0.00 $0.00 $0.00 $0.00 $0.00
   Copayments for
   Institutionalized
   Beneficiaries
$0.00 $0.00 $0.00 $0.00 $0.00
Maximum Copayments for Non-Institutionalized Beneficiaries
    Up to or at 100% FPL:
        Up to Out-of-Pocket Threshold
      Generic/Preferred
      Multi-Source Drug
$1.10 $1.10 $1.10 $1.10 $1.05
      Other $3.30 $3.30 $3.30 $3.20 $3.10
     Above Out-of-Pocket
     Threshold
$0.00 $0.00 $0.00 $0.00 $0.00
    Over 100% FPL:
        Up to Out-of-Pocket Threshold
      Generic/Preferred
      Multi-Source Drug
$2.60 $2.50 $2.50 $2.40 $2.25
      Other $6.50 $6.30 $6.30 $6.00 $5.60
     Above Out-of-Pocket
     Threshold
$0.00 $0.00 $0.00 $0.00 $0.00
Part D Full Subsidy - Non Full Benefit Dual Eligible Full Subsidy Parameters: 2012 2011 2010 2009 2008
Eligible for QMB/SLMB/QI, SSI or applied and income at or below 135% FPL and and resources < $6,940 (individuals) or < $10,410 (couples) (4)
   Deductible $0.00 $0.00 $0.00 $0.00 $0.00
    Maximum Copayments up to Out-of-Pocket Threshold
      Generic/Preferred
      Multi-Source Drug
$2.60 $2.50 $2.50 $2.40 $2.25
      Other $6.50 $6.30 $6.30 $6.00 $5.60
   Maximum Copay above
   Out-of-Pocket
   Threshold
$0.00 $0.00 $0.00 $0.00 $0.00
Partial Subsidy Parameters: 2012 2011 2010 2009 2008
Applied and income below 150% FPL and resources between $6,941-$11,570 (individuals) or $10,411-$23,120 (couples) (category code 4) (4)
   Deductible $65.00 $63.00 $63.00 $60.00 $56.00
   Coinsurance up to
   Out-of-Pocket
   Threshold
15% 15% 15% 15% 15%
    Maximum Copayments above Out-of-Pocket Threshold
      Generic/Preferred
      Multi-Source Drug
$2.60 $2.50 $2.50 $2.40 $2.25
      Other $6.50 $6.30 $6.30 $6.00 $5.60
(1) Total Covered Part D Spending at Out-of-Pocket Threshold for Non-Applicable Beneficiaries - Beneficiaries who ARE entitled to an income-related subsidy under section 1860D-14(a) (LIS)
(2) Total Covered Part D Spending at Out-of-Pocket Threshold for Applicable Beneficiaries - Beneficiaries who are NOT entitled to an income-related subsidy under section 1860D-14(a) (NON-LIS) and do receive the coverage gap discount. For 2012, the weighted gap coinsurance factor is 98.082%. This is based on the 2010 PDEs (86.3% Brands & 13.7% Generics)
(3) The Catastrophic Coverage is the greater of 5% or the values shown in the chart above. In 2012, beneficiaries would be charged $2.60 for those generic or preferred multisource drugs with a retail price under $52 and 5% for those with a retail price greater than $52. As to Brand drugs, beneficiaries would pay $6.50 for those drugs with a retail price under $130 and 5% for those with a retail price over $130.
(4) The actual amount of resources allowable was updated in April 2012 for contract year 2012 and 2013.
                                Click here to see a comparison of plan parameters for all years since 2006


The annual percentage increase in average per capita Part D spending -- used to update the deductible, initial coverage limit, and out-of-pocket threshold for the defined standard benefit for 2012 -- is 4.67 percent. The annual percentage increase in the Consumer Price Index -- used to update the 2012 maximum copayments below the out-of-pocket threshold for certain dual eligible enrollees -- is approximately 1.42 percent. CMS revises these percentages to correct calculation errors identified following the release of the Advance Notice."
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Tools to find a Medicare Prescription Drug Plan

Here are links to some of our more popular 2012 search tools:

:: Ma-Finder: Find a 2012 Medicare Health & Drug Plan
:: PDP-Finder: Find a 2012 Medicare Drug Only Plan
:: PDP-Compare: Does My Prescription Drug Plan Change in 2012?

:: 2012 Medicare Drug Plan Facts
:: Free Newsletter Sign-up - Stay informed on Medicare Part D

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Brand Drug Coverage Gap Discount Program

Pharmaceutical manufacturers will be required to provide certain beneficiaries access to discount prices for certain brand drugs purchased under Medicare Part D. The manufacturer discount prices will be equal to 50% of the plan’s negotiated price defined (minus any applicable dispensing fees). These discount prices must be applied prior to any prescription drug coverage or financial assistance provided under other health benefit plans or programs and after any supplemental benefits provided under the Part D plan. The discounted prices will be charged at the pharmacy (point-of-sale). The beneficiary will not have to do additional paperwork, etc. to receive the benefit.

These manufacturer discount prices will be made available to Part D enrollees who are in the coverage gap or donut hole (they have reached or exceeded the initial coverage limit and have incurred costs below the annual out-of-pocket threshold). Medicare beneficiaries will not be eligible to receive these discount prices if they are enrolled in a qualified retiree prescription drug plan or are eligible for the low-income subsidy. The costs paid by manufacturers towards the negotiated prices of drugs covered under this manufacturer discount program shall be considered incurred costs for eligible beneficiaries and applied towards their out-of-pocket threshold. This means that the total negotiated retail drug price will be applied to the TrOOP and will count toward getting out of the doughnut hole.
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Reduced Cost sharing for Generic Drugs in the Coverage Gap

The coinsurance under basic prescription drug coverage for certain beneficiaries will be reduced for generic covered Part D drugs purchased during the coverage gap (donut hole) phase of the Part D benefit. The coinsurance charged to eligible beneficiaries will be equal to 86% (or actuarially equivalent to an average expected payment of 86%). To be eligible for this reduced cost sharing, a Part D enrollee must have gross covered drug costs above the initial coverage limit and true out-of-pocket costs (TrOOP) below the out-of-pocket threshold. Medicare beneficiaries will not be eligible for this reduced cost sharing if they are enrolled in a qualified retiree prescription drug plan or are eligible for the low-income subsidy.
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LIS Benchmarks - lack of qualifying plans

:: Click here to review the 2012 Low-Income Premium Subsidy Amounts per State

In some Medicare Part D regions, low income beneficiaries would have a very limited choice of zero-premium prescription drug plans under the statutory methodology for calculating the maximum government premium subsidy. For 2012, Part D plans will be allowed to charge subsidy-eligible beneficiaries a monthly beneficiary premium equal to the applicable low-income premium subsidy amount, if the plan’s adjusted basic beneficiary premium exceeds the low-income premium subsidy amount by a minimal amount. CMS will issue subsequent guidance specifying the minimal amount.

:: Click here to review the 2012 Low-Income Premium Subsidy Amounts per State
(includes 2012 - 2006 for comparison)

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Last updated on: 02/18/2014

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