Marci's Medicare Answers: March 2014

Dear Marci,

I recently became eligible for Medicare and was told that I need to sign up for a Medicare Part D plan. What is Medicare Part D?

—Shivram

Dear Shivram,

Medicare Part D, also known as the Medicare prescription drug benefit, is the part of Medicare that covers most outpatient prescription drugs. In order to qualify for Medicare Part D, you must have either Medicare Part A, the hospital insurance part of Medicare, or Medicare Part B, the medical insurance part of Medicare.

Medicare Part D is only offered through private insurance companies, and you can get Part D through one of two ways. Specifically, you can get Medicare Part D through either a stand-alone Part D plan that works with Original Medicare or a Medicare Advantage Prescription Drug plan, also known as a Medicare private health plan that provides prescription drug coverage to its plan members.

Signing up for a Medicare Part D plan is optional and is only allowed during certain enrollment periods. Keep in mind that people who do not sign up for a Medicare Part D plan in a timely manner may have to pay an enrollment penalty in the future and wait for a certain enrollment period to sign up for a Part D plan. However, some people may be able to delay enrollment into a Medicare Part D plan if they have some form of creditable drug coverage. Creditable drug coverage is coverage that is as good as or better than the Medicare prescription drug benefit. If you receive drug coverage through a different source, speak to your benefits administrator and ask whether your drug coverage is considered creditable. You should also get a written notice indicating whether or not your drug coverage is considered creditable according to Medicare’s standards.

In addition, people who qualify for Extra Help, the federal assistance program that helps to pay prescription drug costs for people with limited finances, may be automatically enrolled into a Medicare Part D plan. Bear in mind that most people who have both Medicare and Medicaid, the health insurance program that serves those with limited finances, will get Extra Help automatically, and will therefore, most likely be automatically enrolled into a Part D plan. To learn more about Extra Help, go online and visit https://secure.ssa.gov/i1020/start. You can also ask for an application by calling the Social Security Administration Hotline at 800-772-1213 or by visiting your local Social Security office.

—Marci

Dear Marci,

I’ve read articles about the doughnut hole and how Obamacare has changed drug coverage for people with Medicare. How has Obamacare impacted my Medicare prescription drug coverage?

—Ezekiel

Dear Ezekiel,

This is a great question. The Affordable Care Act (Act), also informally known as Obamacare, has actually improved Medicare prescription drug coverage for people with Medicare. Specifically, the ACA works to gradually close the doughnut hole, also known as the coverage gap, so that people with Medicare drug coverage never have to pay more than 25 percent of the cost of their covered medications at any point during the year beginning in 2020.

If you have a Medicare Part D plan, also known as a Medicare prescription drug plan, the doughnut hole is the period of time during which the cost of your prescription drugs suddenly increases. In 2014, you enter the doughnut hole when your total drug costs (i.e. what you and your Part D plan have paid towards your prescription drugs) reaches $2,850. After both you and your plan have paid this amount toward your drugs in 2014, you will most likely fall into the doughnut hole and have to pay more for your drugs. You get out of the doughnut hole and pay significantly less for your drugs after you have paid a certain amount out of your own pocket since the beginning of the year. In 2014, you get out of the doughnut hole after you have paid $4,550 out of your own pocket since the start of the year for drugs covered by your Part D plan.

Before the ACA, people had to pay for the entire cost of their prescription drugs while they were in the doughnut hole. The ACA gradually closes the doughnut hole, meaning that in 2014, you will only be responsible for paying 47.5 percent of the cost of brand-name drugs and 72 percent of the cost of generic drugs if you are in the doughnut hole. By 2020, the doughnut hole will be completely closed, and you will not have to pay more than 25 percent of the cost of your Part D-covered prescription drugs at any time during the year.

One very important thing to keep in mind is that Health Insurance Marketplaces, also known as Health Insurance Exchanges, do not affect people with Medicare. The Health Insurance Marketplaces were created as part of the ACA; however, they should not affect people with Medicare. If you have Medicare, you should not sign up for health insurance in the Marketplace. If you have questions about your Medicare benefits, contact 800-MEDICARE or go online and visit www.medicare.gov.

—Marci

Dear Marci,

I recently received a yellow notice in the mail from the Centers for Medicare & Medicaid Services, saying that I will automatically get Extra Help. What does this mean?

—Petra

Dear Petra,

Throughout the year, the Centers for Medicare & Medicaid Services (CMS) sends yellow notices to people who get their Medicare benefits through Original Medicare, the traditional Medicare program administered directly through the federal government, and have Medicaid, the health insurance program that serves people with limited finances. Essentially, this yellow notice tells you that you will automatically get Extra Help, because you have both Original Medicare and Medicaid.

Extra Help is the federal assistance program that helps people with Medicare pay for their prescription drug costs. If you have received this yellow notice in the mail, you should not have to apply for Extra Help. Again, you should get Extra Help automatically. However, in order to have Extra Help, you also need to have a Medicare Part D plan, also known as a Medicare prescription drug plan. As such, this yellow notice should also tell you that you will automatically be enrolled into a Medicare Part D plan if you do not actively choose and sign up for a Part D plan on your own. While the notice lists the name of the Part D plan you will be enrolled in if no changes are made, the notice should also list other Part D plans that you can sign up for.

If you would like to choose and sign up for a different Part D plan, you should contact 800-MEDICARE to do so. You can also contact your local State Health Insurance Assistance Program (SHIP) for further assistance on choosing a Part D plan that best suits your individual needs.

—Marci

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Marci’s Medicare Answers is a service of the Medicare Rights Center (www.medicarerights.org), the nation’s largest independent source of information and assistance for people with Medicare. To subscribe to “Dear Marci,” MRC’s free educational e-newsletter, click here.