A Step-by-Step Guide to Medicare Part D’s Prescription Drug Plan
Medicare Part D is nothing short of confusing. If you did not sign up for the program by May 15th of this year, you could end up without drug coverage, or have to pay the penalty for applying after the deadline. The penalty is a 1% increase in your premium for each month after May 2006 in which you don’t enroll.
The following is a step-by-step guide designed to get down to the basics of Medicare Part D, cut through the jargon, and tells you exactly what you need to know.
Step #1: Eligibility. Are you eligible for Medicare’s new prescription drug plan? Simply put, if you are eligible for Medicare Part A or Part B, you are eligible for Part D.
Step #2: Cost. What will Medicare Part D cost you? For drug expenses in the range of $0-$250, you pay 100% of the cost. When and if your costs fall between $250-$2,250, the plan pays for 75%, and you pay for 25%.
At this point, the infamous coverage gap, often referred to as the “donut hole,” comes into play. Essentially, if your total drug costs, which include what you and the plan pay for prescriptions, exceed $2,250 per year, you pay 100% of your drug costs after that point until you reach $3,600 in out-of-pocket expenses (total $5,100 in drug costs). But after you escape from the “donut hole,” you only have to pay for 5% of your drug costs.
What you pay also includes the usual insurance costs associated with a drug plan. If you do not qualify for extra help, you will pay: monthly premiums, a yearly deductible, and co-pay or co-insurance for each prescription.
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