Medicare Part D Coverage: What Does Medicare Part D Cover?

Medicare part D is a federal program to help Medicare recipients in the United States to pay for their prescription drugs. This program has been in existence since January 1, 2006. Before that time all Medicare recipients were required to pay for all of their prescription drug costs out of pocket. Any Medicare part A or B recipient is eligible to sign up for part D. The coverage does not come directly from the government. This medicare part D coverage is available through private sources in one of two ways; either a PDP (Prescription Drug Plan) or a Medicare Advantage Plan. The difference between these plans can vary as in the premiums paid or the amount of coverage so it is a good idea to research thoroughly to find the right plan for you.

The general guidelines are as follow: In a Medicare Part D Plan there is a deductible that the recipient must pay before coverage will begin. In 2010 this deductible was $310. After the deductible, the plan will pay 75% of the recipients' prescription drug costs until the initial coverage limit of $2830 out of pocket. After this $2830 limit is reached the beneficiary must pay the full costs of their prescription drugs out of pocket until they reach the catastrophic coverage limit of $4550. Then the beneficiary will pay either 5% of the cost of each prescribed drug or $2.50 for generics or $6.30 for brand-name drugs whichever is greater. This gap between the initial coverage limit and the catastrophic coverage limit is commonly known as the "donut hole". Every year this cycle starts all over again.

There are many ways in which medicare recipients can close this gap in coverage. Medicare recipients may qualify for subsidized medicare part D coverage if their income is under 150% of federal poverty guidelines. Under the subsidized plan, all or part of the premium and prescription costs can be paid for by the federal government. Someone not eligible for the subsidy can purchase a "medigap" plan which is designed to provide supplemental drug coverage for any period of time during the year in which beneficiaries are without prescription coverage. This supplemental coverage will pay for part or all of prescription costs during this time period.