Medicare Drug Plans

When the Social Security Act of 1965 was signed into law by President Lyndon B. Johnson, many could hardly imagine how expensive healthcare in general was going to become. The overall goal of the new Medicare program was to provide senior citizens with access to affordable healthcare, something the private sector was not accomplishing. As time has progressed and technology has advanced one of the most expensive factors for many senior citizens has become prescription drugs.

Senior citizens are often prescribed one or more drugs to help them cope with or treat diseases they have developed late in life. The initial Medicare program however did not provide coverage for many of these drugs, leaving senior citizens with an expensive bill in hand for their prescription drugs. As a result of this Medicare Part D was signed into law in 2003, creating Medicare drug plans designed to help seniors cover their expenses related to prescription drugs.

Medicare drug plan eligibility is determined by an individual’s eligibility for the greater Medicare program. This includes the following individuals:

  • U.S. citizens over 65 years of age
  • Legal immigrants over 65 who have lived in the U.S. for 10 years or more
  • Individuals suffering from ALS or Lou Gehrig’s Disease
  • Individuals suffering from End Stage Renal Disease (kidney failure)

As long as an individual falls into one of these categories and is eligible for Medicare Part A and B, they are eligible for a Medicare drug plan (also known as Medicare Part D). Those who are eligible for Medicare benefits must enroll themselves in a Medicare drug plan in order to reap the benefits of the program. Enrollment periods last from November 15th to December 31st each year for the following coverage year.

Medicare drug plans are available to Medicare beneficiaries in one of two forms. The first, and most popular, option is for individuals to enroll in a stand-alone prescription drug plan which provides only prescription drug coverage. Beneficiaries can also collect prescription drug assistance through enrollment in Medicare Part C. This route combines an individual’s Medicare Part A, B, and D coverage into one plan provided by a private insurance company working under contract with the government.

The varying plans available to Medicare beneficiaries can be very difficult to decipher, even for the smartest of individuals. Generally speaking Medicare drug plans are built with different tier options for beneficiaries to choose from. The lowest tier plans provide coverage for the most often prescribed and/or cheapest drugs. The more expensive a drug is to prescribe, the higher a tier it is placed into by plan providers. The cost of any one Medicare drug plan is determined by the tier level it falls into, which as mentioned is based upon the type of drug being covered.

Medicare drug plans are provided by private insurance companies working under contract with the Centers for Medicare and Medicaid Services (CMS). The CMS provides a list of all drugs that can be covered under Medicare drug plans; however it is up to the individual insurance providers to determine which drugs they choose to cover for their plan holders. The CMS has set forth a list of drugs that Medicare drug plans are not allowed to cover and they include some of the following:

  • Drugs used to control anorexia
  • Drugs designed for weight loss or weight gain
  • Fertility drugs
  • Erectile dysfunction medications
  • Cosmetic drugs
  • Barbiturates

The above list is not all inclusive but instead offers a general idea of what drugs will not be covered under Medicare drug plans. Generally speaking, any drug that lacks the approval of the Food and Drug Administration (FDA) will not be covered. Another general guideline states that any drug not available for purchase in the United States will not be covered.

Medicare drug plans were a beneficial addition to the Medicare program for many senior citizens. The program made it possible for seniors to afford their critical medications without suffering financial distress in the process. However, there have been problems with the young program including what is known as a “Donut Hole.” This occurs when some drugs have extremely high deductibles that must be reached before coverage actually kicks in to assist beneficiaries. In these circumstances seniors often have to spend upwards of $4,000 out of pocket before Medicare drug plans take effect.