To get Medicare coverage for your prescription drugs, you have two options. If you have
the Original Medicare Plan, you must choose and join a Medicare Prescription Drug Plan. Or, you may be able to choose and join a Medicare Advantage Plan (like an HMO or PPO) that includes Medicare drug coverage. Whichever you choose, you should know that prescription drug coverage can vary by cost, coverage, and convenience. Some of these factors might be more important to you than others, depending on your situation and prescription drug needs. Each year you should review your prescription drug needs and compare Medicare drug plans. This fact sheet has information to help you compare Medicare prescription drug coverage.

1. Cost
When you get Medicare prescription drug coverage, you pay part of the costs, and
Medicare pays part of the costs. Your costs will vary depending on which Medicare drug plan you choose. You should look at your current prescription drug costs to find the Medicare drug plan that meets your needs.

Premium
This is the monthly cost you pay to join a Medicare drug plan. Premiums vary by plan.

Deductible
This is the amount you pay for your prescriptions before your Medicare drug plan starts to share in the costs. Deductibles vary by Medicare drug plan. No Medicare drug plan may have a deductible more than $265 in 2007. Some Medicare drug plans may not have any deductible.

Copayment/Coinsurance
This is the amount you pay for your prescriptions after you have paid the deductible. In some Medicare drug plans, you pay the same copayment (a set amount) or coinsurance (a percentage of the cost) for any prescription. In other Medicare drug plans, there might be different levels or “tiers,” with different costs. (For example, you might have to pay less for generic drugs than brand names. Or, some brand names might have a lower copayment than other brand names.) Also, in some Medicare drug plans your share of the cost can increase when your prescription drug costs reach a certain limit.

2. Coverage
What is a Formulary?
 A formulary is list of drugs that a Medicare drug plan covers. Formularies include generic drugs and brand-name drugs. In general, the formulary must include at least two drugs in all categories and classes of drugs used by people in Medicare. This makes sure that people with different medical conditions can get the treatment they need.

Prior Authorization
Some drugs are more expensive than others even though some less expensive drugs work just as well. Other drugs may have more side effects, or have restrictions on how long they can be taken. To be sure certain drugs are used correctly and only when truly necessary, Medicare drug plans may require a “prior authorization.” This means before the Medicare drug plan will cover these prescriptions, your doctor must first contact the plan and show there is a medically necessary reason why you must use that particular drug for it to be covered. Medicare drug plans might have other rules like this to ensure that your drug use is effective.

Coverage Gap
Some Medicare drug plans have a coverage gap. You reach the coverage gap when you and your Medicare drug plan have spent a certain amount of money for covered drugs. While you are in the coverage gap, you have to pay all costs for your drugs. This amount doesn’t include your Medicare drug plan’s monthly premium. You must continue to pay the monthly premium even while you are in the coverage gap. For plans with a coverage gap, the most you will ever have to pay out-of-pocket before you are out of the coverage gap is $3,850 (in 2007). Each state offers at least one Medicare drug plan with some type of coverage during the gap (generally for an extra premium).

Note: If you get extra help paying your drug costs, you won’t have a coverage gap. However, you will probably have to pay a small copayment or coinsurance amount.

3. Convenience
Medicare drug plans must contract with pharmacies in your area. Check with the Medicare drug plan to make sure your pharmacy or a pharmacy in the plan is convenient to you. Also, some Medicare drug plans may offer a mail-order program that will allow you to have drugs sent directly to your home. You should consider all of your options in determining what is the most cost-effective and convenient way to have your prescriptions filled.

4. Peace of Mind Now and in the Future
Even if you don’t take a lot of prescription drugs now, you still should consider joining a Medicare drug plan. As we age, most people need prescription drugs to stay healthy. Joining gives you peace of mind knowing you have coverage if your drug needs change. For most people, joining when you are first eligible also means you will pay a lower monthly premium in the future since you may have to pay a late enrollment penalty (higher premium) if you choose to join later.

You will have to pay this penalty as long as you have a Medicare drug plan. If you reach the point where you have spent $3,850 (in 2007) out-of-pocket for drug costs during the year, the Medicare drug plan will pay most of your remaining drug costs. This protection could start even sooner in some Medicare drug plans.


Source:
My Health.  My Medicare
CMS Pub. No. 11163
 Revised May 2007