A new year always brings changes. The only thing constant in the world is change. Being informed is one of the greatest ways to help alleviate confusion and stress during times of change, and can empower you to make the best decisions for you and your family. Below is a brief but straight-to-the-point description of Medicare in 2011. Subsequent LRG newsletters will cover various issues on healthcare, especially prescription drugs and how you can receive the help you need and deserve.
What Is Medicare?
Medicare is health insurance for people 65 or older, people under 65 with certain disabilities and anyone at any age with End-Stage Renal Disease (ESRD) (permanent kidney failure requiring dialysis or a kidney transplant). Medicare has different parts to help cover specific services.
Medicare Part A – is Hospital Insurance that helps cover inpatient care in hospitals and ies, hospice, and home health care.
Medicare Part B – is Medical Insurance that helps cover doctors’ services, hospital outpatient care, home health care and some preventive services.
Medicare Part C (Medicare Advantage Plan) – is another Medicare health plan (like an HMO or PPO) choice you may have which are offered by private companies approved by Medicare. If you join a Medicare Advantage Plan, the plan will provide all of your Part A and Part B coverage. Medicare Advantage Plans may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most of them include Medicare prescription drug coverage (Part D see below). Medicare pays a fixed amount for your care every month to the companies offering Medicare Advantage Plans. These companies can charge different out-of-pocket costs and have different rules for how you get services (like whether you need a referral to see a specialist, etc.). These rules can change each year.
Medicare Part D (Medicare Prescription Drug Coverage) – is a prescription drug option run by Medicare-approved private insurance companies. Part D helps cover and/or lower the cost of prescription drugs. This coverage can help protect you against higher costs in the future. Each plan can vary in cost and drugs covered. Two ways to get Medicare prescription drug coverage are through
1. Medicare Prescription Drug plans,
2. Medicare Advantage Plans or other Medicare Health Plans
To join a Medicare Prescription Drug (Part D) Plan you must have Medicare Part A OR Part B. To join a Medicare Advantage Plan (Part C) you must have Medicare Part A AND Part B. If you have limited income and resources, you may qualify for extra help to pay for Medicare prescription drug coverage. You may also get help from your state.
CHANGE in 2011
Most Medicare drug plans have a coverage gap (also called the Donut Hole) which means that after you and your drug plan have spent a certain amount of money for covered drugs you will then have to pay the costs out of pocket for your prescriptions up to a yearly limit. Enrollees are responsible for paying 100 percent of their prescription drug costs when they hit the donut hole. In the past enrollees paid full price for their prescription drugs but in 2011 enrollees in the donut hole receive a 50 percent discount on covered brand name prescription drugs.
Yes you read it correctly. YOUR PRESCRIPTIONS (if they are covered brand name prescription drugs) WILL BE HALF PRICE WHEN YOU HIT THE DONUT HOLE. Your yearly deductible plus your coinsurance or copayments and what you pay in the donut hole all count towards the total out of pocket yearly limit. The limit doesn’t include the drug plan premium you pay or what you pay for drugs that aren’t covered. This is extremely important for you to consider when calculating your overall yearly costs, making a decision about the plan you wish to apply for and what additional assistance you will need if any. This was a shock for most when they went from making co-payments for their drugs to paying 100 percent of the cost. Now enrollees receive a 50 percent discount. So here’s the donut hole for 2011:
- You pay the first $310 of drug costs before your plan starts. This is considered the deductible.
- You pay your copayment and your plan pays its share until the combined total amount (plus your deductible) reaches $2,840.
- Donut hole – when drug expenditures are between $2,840 and $4,550 you will be in the donut hole. Previously, you had to pay the full cost of your prescription drugs but in 2011 you will get a 50 percent discount on covered brand name prescription drugs. You will spend $1,710 in prescription drugs during your time in the donut hole.
Once you reach $4,550 in out of pocket expenses for prescription drugs you will receive catastrophic coverage and you only pay a small copayment for each drug until the end of the year.
The above expenses only include the cost of prescription medications. It does not include the monthly premium that you pay to the prescription drug plan, this is still 100 percent your responsibility to pay unless you are receiving some other forms of assistance. And the above details what you will experience each year unless the state you live in or the federal government makes changes to the plan in upcoming years. The plans for Medicare are to phase in additional discounts on the cost of both brand name and generic drugs in upcoming years. By 2020, the changes that will go into effect will close the coverage gap and rather than paying 100 percent of the costs, your responsibility will be 25 percent of the prescription drug costs (Table 1).