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Medicare Prescription Drug Coverage Plan Changes for 2013

2012 2013
Annual Deductible If applicable, $320 If applicable, $325
Initial Coverage Stage Ends at $2,930 Ends at $2,970
Coverage Gap Until $4,700 Until $4,750

 

Differences between one prescription drug plan and another – Medicare Prescription Drug Plans Overview

Plans have flexibility in how they design a Part D benefit structure as show in this table.

Plan Feature Effect on Benefit
No Deductible Plans may eliminate the Medicare Part D deductible.

Different co-payment/coinsurance levels Many plans have moved to flat co-payments rather than coinsurance for the member cost sharing.
Coverage Gap Some plans provide benefits in the coverage gap.
Different drugs on formulary Plans may have different drugs on their formulary or drug list.
Drugs at different co-payment tiers Plans typically charge different co-payments for drugs at different tiers (rather than charge the same cost sharing for all drugs obtained during the initial coverage level).
Plans may include different pharmacies in its network CMS approves a plan’s pharmacy network to ensure appropriate member access.

 

2013 Member Expense for Medicare Prescription Drug Plans: Who Pays What?

Payor Source Premium* Deductible* Initial Coverage Coverage Gap Catastrophic Coverage
Member Member pays a monthly amount to the Plan. Member may have an initial amount they need to pay before the Plan pays its share, ranging from $0-$325. When this initial amount or deductible is paid the member moves to the Initial Coverage stage. Member pays a copayment/coinsurance for a drug. When the amounts the Plan pays plus member payments (including deductible) reaches $2,970 the member moves to the coverage gap. Member pays about 47.5% of the cost of most brand-name drugs and 79% of the cost of generic drugs until his/her yearly TrOOP-True Out-of-Pocket costs (not including premiums) equal $4,750. (For non-LIS members only).Once member has spent $4,750 TrOOP they move to Catastrophic Coverage.Any costs paid by the Plan during the plan year are not applied toward the member’s TrOOP The member pays the greater of $2.65 for generics and $6.60 for brand-name or 5% of the total drug cost.
Plan N/A Plan does not share in this cost. Plan pays its share until Plan plus member amounts paid reaches $2,970. The Plan pays the rest of the costs for covered drugs during the coverage gap. Some of these costs are also paid by drug manufacturer discounts. Plan pays the majority of the drug costs until the end of the year.

 

* These figures are based upon the Standard benefit. Premiums and deductibles vary by Plan coverage.

 

If the member does not enroll during his/her initial eligibility period, a penalty of 1% of the national average Medicare Prescription Drug Plan premium is assessed for each month the consumer delays enrollment. The Late Enrollment Penalty is a Medicare requirement and cannot be waived or changed by the plan. Unless the member qualifies for an exception, such as having creditable coverage, the penalty is added to the monthly premium and is paid as long as the member is enrolled in any Medicare Prescription Drug Plan. (Members who are deemed low-income subsidy are not assessed a late enrollment penalty.)

Let’s assume a consumer becomes eligible for Medicare Part D in the initial election period (turned 65 in May). They have three additional months (from their month of birth) to enroll in a Medicare Part D Plan. If they do not enroll, a 1% per month penalty will begin to accumulate. By year-end, 4 months will have passed (from September to December is four months) 4 x 1% = 4%.

If this consumer fails to enroll during the next Annual Election Period, he will not be able to enroll for another twelve months.

To calculate the penalty, add 12% for one year (1% per month) to the original 4%. This adds up to 16%. The 12% per year penalty will continue to accumulate until enrollment.

Formulary

  • A list of medications covered within the benefit plan; often represents the level of cost- sharing associated with various groupings of medications (Preferred Generics, Preferred Brand, Non-Preferred Brands). Some online formulary documents list only the Preferred generic and brand drugs. This is called the Preferred Drug List or PDL.
  • Each plan develops its formulary through a very rigorous clinical evaluation process, including physicians and pharmacists.
  • The Centers for Medicare & Medicaid Services (CMS) provides strict guidelines to the plans regarding the types of medications that must be covered. CMS also reviews and approves each plan’s formulary.

 

Tiers and Formularies

Many Medicare Prescription Drug Plans group the medications into tiers. Medications within a specific tier have the same cost to the member; medications in different tiers have different costs. The number of tiers may vary from plan to plan.
Here is an example:
2013 Tier You Pay What is Covered?
Tier 1 – Preferred Generic Lowest co-payment Lower-cost, commonly used generic drugs
Tier 2 – Non-Preferred Generic Low co-payment Most generic drugs
Tier 3 – Preferred Brand Medium co-payment Many common brand-name drugs and some higher-cost generic drugs
Tier 4 – Non-Preferred Brand Higher co-payment Non-preferred generic and non-preferred brand-name drugs
Tier 5 – Specialty Tier Coinsurance Unique and/or very high-cost drugs
* A preferred brand name prescription medication is a drug that has been determined by the plan to be as effective as other medications.

Low Income Subsidy Qualifications for 2013

Single person earning less than $16,755 per year*:

Consumers with:

  • Incomes below 135% of the Federal Poverty Level (FPL)**
  • Assets that do not exceed FPL-defined levels

Benefits:

  • No monthly premium
  • No deductible
  • Minimal cost sharing

Consumers with:

  • Incomes between 135% and 150% of the FPL
  • Assets that do not exceed FPL-defined levels

Benefits:

  • Sliding scale premiums
  • Lower deductible
  • Reduced cost sharing

Married with an income less than $22,695 per year*:

Eligibility Requirements:

The consumer is eligible for Medicare and Medicaid, i.e., full-benefit Dual-eligible.

Benefits:

  •  No monthly premium
  • No deductible
  • Minimal cost sharing

The consumer is eligible for Medicare and Medicaid, i.e., full-benefit Dual-eligible.No monthly premiumNo deductibleMinimal cost sharing

*Income levels and assistance may vary for Alaska, Hawaii and the U.S. territories. Income levels in all areas may change each year.

**For more information about FPL, please see the CMS FPL Memo in the Resources Tab titled 2012 Medicare Part D Low-Income Subsidy (LIS) Income and Resource Standards.

Call  Medicare (1-800-MEDICARE) for additional information and applications.

How Does a Consumer Apply for Extra Help?

Your consumer automatically qualifies and does not need to apply for extra help if:

  • He/she receive both Medicare and Medicaid benefits (dual eligible) and meet certain income requirements,

and/or

  • He/she receive both Medicare and Supplemental Security Income (SSI) benefits and meet certain income requirements.

If the consumer does not automatically qualify for Low Income Subsidy (LIS), the consumer may contact the Social Security Administration and request a Low Income Subsidy Application (Form SSA-1020B):

1-800-772-1213 (TTY/TDD users): 1-800-325-0778  7a.m. – 7p.m. EST, Monday – Friday

OR

Go to the Social Security Administration Website anytime to complete an application online: http://ssa.gov