Senior citizens can have access to lower drug costs through Medicare's prescription drug program under Medicare Part D plans. Part D plans provide discount coverage up to a certain point on an annual basis. The coverage gap period occurs once participants have exceeded Part D's discount coverage. Fortunately, Medicare provides for situations where additional coverage is needed.
Medicare Prescription Drug Coverage
In 2004, Medicare prescription coverage was developed as an additional health plan to supplement Medicare's hospital and medical coverages, also known as Part A and Part B. Prescription drug coverage is administered through private insurance companies, unlike Medicare's government-administered hospital and medical coverages, according to Medicare.gov. As a result, prescription or Part D plan costs can vary from company to company; however, coverage gap periods remain the same regardless of which company a plan is purchased through. And while participants pay more once they enter the coverage gap, this period ultimately keeps Medicare's prescription coverage affordable while providing for those who encounter unusually high prescription costs.
Plan Types
Medicare Part D plan types are offered through Medicare Advantage Plans as well as through managed care plans, such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Medicare prescription plans provide coverage for any drugs that appear on Medicare's list of approved drugs, both generic and name brand, according to Part-D Medicare, a Medicare reference site. Different plan types may require certain copayment or deductible amounts be paid in order for Part D benefits to apply toward prescription purchases. Once a person has reached an annual cutoff point in terms of drug costs, the coverage gap period begins.
Coverage Gap Rules
As of 2011, Medicare's coverage gap period --- also known as the "doughnut hole" --- begins once a person has reached $2,840 worth of prescription drug coverage within a year's time, according to the Association for the Advancement of Retired Persons, or AARP. While in the coverage gap, Medicare still pays for 50 percent of the cost for brand name drugs and 7 percent discount for generics. The coverage gap period ends once participants reach a total of $4,550 in out-of-pocket costs. This out-of-pocket cost amount includes any deductibles and copays paid throughout the year plus any costs incurred during the coverage gap.
Considerations
In cases where a particular drug type does not appear on Medicare's list of approved drugs, any money spent out-of-pocket does not count toward the amount required to reach the end of coverage gap period. As far as insurance company plans go, some insurers do provide additional discounts during the coverage gap period, meaning participants can receive higher discounts on name brand and generic prescriptions. According to Senior Educators Insurance Services, Medicare participants who require additional coverage can benefit from the built-in catastrophic coverage provision that begins once the coverage gap period ends. Once a person pays the required $4,550 in out-of-pocket costs, Medicare Part D covers 95 percent of drug costs for the rest of the year. Most Part D plans also require a small copayment at time of purchase during the catastrophic coverage period.
Tags: coverage period, coverage period, drug costs, Medicare Part, Part plans, additional coverage
