Medicare Part D Frequently Asked Questions (FAQs)

Print this page

back to Prescription Drugs

This page gives a general overview of the new drug coverage through a list of frequently asked questions. You can click on a link below to go straight to the answer for that question.

1. What is Medicare Prescription Drug Coverage?
2. When can I enroll in a Medicare prescription drug plan?
3. What if I don't enroll in a Medicare prescription drug plan right away?
4. When and how often can I switch plans?
5. What if I already have prescription drug coverage?
6. What if I have Medicare and Medi-Cal?
7. What if I have Medicare and Medi-Cal with a share of cost?
8. What are my Medicare Prescription Drug Plan options?
9. What is the cost of Medicare prescription drug coverage?
10. Will my drugs be covered?
11. What should I watch for when companies try to sell me a drug plan?
12. How do I enroll in a drug plan?
13. Where can I get help in deciding if I need a prescription drug plan and in choosing a plan?

1. What is Medicare Prescription Drug Coverage?

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (also known as the MMA), was signed into law on December 8, 2003. It created a voluntary prescription drug insurance program through Medicare called "Medicare Prescription Drug Coverage" or "Medicare Part D".

This drug coverage is available to everyone who has Medicare, regardless of income, health status, or how their prescriptions have been covered. Private companies provide the insurance coverage. You choose the drug plan and pay a monthly premium. If you have a limited income, you may get extra help to cover prescription drugs for little or no cost. The amount of the monthly premium you pay cannot cost more because of your health condition or the number of prescriptions you need. In addition to a premium, you may also have to pay a deductible and a portion of the cost of your drugs.

While Medicare Part D is a voluntary benefit, if you choose NOT to enroll in a plan when first eligible AND you do NOT have other drug coverage that is as good as or better than Medicare’s (also known as ‘creditable coverage’), you may be charged a penalty if you decide to enroll at a later time, and you will only be able to enroll during certain times of the year. The penalty is 1% for every month you were eligible for Part D but did not enroll. If you choose not to enroll and you DO have other drug coverage that is as good as or better than Medicare’s, you will not pay a premium penalty if you later decide to enroll in Part D.

Medicare has set a standard benefit design for all drug plans. Companies have to offer a plan that is at least as good as the standard design. Some companies offer more coverage and additional drugs for a higher monthly premium. In California, in 2008, there are 56 stand-alone drug plans (PDPs) that are available throughout the state and many Medicare Advantage plans (MA-PDs).

Medicare drug plans cover both generic and brand-name drugs. Plans have rules about what drugs are covered in different drug categories. Most plans have a formulary, which is a list of drugs covered by the plan. This list must always meet Medicare's minimum requirements, but in some situations, it can be changed by the plan during the year. 2 such situations include:

1. if a new generic version of a covered brand-name drug becomes available; or
   
2. if new information shows a drug to be unsafe.

In general, however, plans cannot stop or reduce the coverage of a drug you are currently taking. If a formulary change is made that affects you, the plan must let you know at least 60 days before a change takes place.

If your doctor thinks you need a drug that is not on the list, or if one of your drugs is being removed from the list, you or your doctor can apply for an exception and appeal the decision.

Drug plans must contract with some pharmacies in your area, but not all pharmacies will contract with all plans. Check with the plan to make sure that the pharmacies in the plan you choose are convenient to you. Many plans will also allow you to get your prescriptions through the mail, often at a lower cost.

↑ back to top

2. When can I enroll in a Medicare prescription drug plan?

You can enroll into a Part D plan during the annual election period (November 15 – December 31) with benefits beginning on January 1st.

If you are about to become or recently became eligible for Medicare, you have a 7-month initial enrollment period. It includes the 3 months prior to the month you become eligible for Medicare, your month of eligibility, and 3 months after the month you become eligible. If you don't enroll in a Medicare drug plan during this 7 month period, premium penalties will begin to accrue (if you do not have other drug coverage that is considered as good as Medicare's and you decide at a later time to enroll in a Part D plan). Also, you will not be able to join a drug plan until the next annual election period (November 15-December 31).

↑ back to top

3. What if I don't enroll in a Medicare prescription drug plan right away?

You don't have to enroll in the Medicare drug coverage if you don't want to, but for most people, joining a plan once you are eligible means you will pay your lowest possible premium. If you don't enroll when you are first eligible for it and later change your mind, you might have to pay a higher premium with a penalty for late enrollment, and you might face restrictions on when you can enroll.

The government is encouraging people on Medicare to get the drug coverage by applying a premium penalty to those who wait, unless they have other coverage that is at least as good as the standard coverage Medicare is offering (this is referred to as “creditable coverage”). If you are eligible and decide to wait, it is likely that you will pay a 1% penalty per month for every month you were eligible for coverage and did not sign up. The penalty will be added to your premium each year for as long as you have Medicare prescription drug coverage. Note that for 2008 Medicare is again waiving this penalty for anyone who qualifies for extra help, also known as the low-income subsidy (LIS) program.

Another reason to consider joining a plan as soon as you are eligible is that if you wait, you will generally only be able to enroll in Medicare Prescription Drug Coverage at the end of every year during the "annual election period," between November 15 and December 31. Coverage for the new plan begins in January of the following year.

↑ back to top

4. When and how often can I switch plans?

In general, you may only switch plans between November 15 and December 31 each year, for coverage beginning January 1 of the following year. Some exceptions to this are:

• if you move to another region outside the service areas of your plan or enter a nursing home
• if you are in a nursing home or other institution: you can switch drug plans if you change institutions
• if you qualify for the extra help/low-income subsidy, you may switch plans in any month (regardless of whether you have Medi-Cal or are enrolled in a Medicare Savings Program (MSP))
• if you loose your eligibility for the extra help, you have a 2-month period beginning in the month you receive notice of your loss of the low-income subsidy

For more information on these exceptions and other situations in which you can change plans mid-year, contact your local HICAP.

↑ back to top

5. What if I already have prescription drug coverage?

If you already have some type of prescription drug coverage that is at least as good as Medicare's (“creditable coverage”), you might be able to keep it without the risk of paying the late enrollment penalty if you decide to enroll in a Medicare prescription drug plan later. See below for more information:

• People with prescription drug coverage through a former or current employer or union.

• People with prescription drug coverage through TRICARE or the Department of Veteran's Affairs (VA) or the Federal Employee Health Benefits Program (FEHB).

↑ back to top

6. What if I have Medicare and Medi-Cal?

If you have both Medicare and full Medi-Cal, you no longer have prescription drug coverage through Medi-Cal for most of your drugs (though you continue to receive your other health coverage through Medi-Cal). You have drug coverage through Medicare Part D. Either you already signed up for a Part D plan or Medicare automatically assigned you to one. You have the right to switch to a different plan in any month. You should make sure you are in a plan that best meets your needs so that all or most of the drugs you are taking are covered.

Note: Medi-Cal does continue to pay for some drugs that standard Medicare drug plans do not cover. These include drugs in these categories: benzodiazepines (including Xanax and Valium, and other drugs often used for anxiety and insomnia); barbiturates (often used for seizure disorders or to relieve anxiety); drugs used for anorexia, weight loss, or weight gain; and drugs used for smoking cessation.

In addition, Medi-Cal pays for some drugs in the following categories: cough and cold drugs; over-the-counter drugs; and vitamins and minerals.

Medi-Cal does not pay for fertility drugs or cosmetic drugs.

If you’re newly eligible to Medicare

Note that because of computer problems, people who are on Medi-Cal and become eligible for Medicare are not always assigned to a Part D plan the month they become eligible. If this happens to you and you are not automatically assigned to a Part D plan, pharmacies can (but do not always) bill a “back-up” system called Wellpoint/Point of Sale (POS) for drugs you need immediately. If you encounter problems obtaining drugs, you can contact your local HICAP program.

Note that your Part D drug plan may be required to reimburse you for drug costs you incur during this delay/gap of coverage minus your drug copayments of up to $2.25 for generics and up to $5.60 for brand name drugs.

To have drug coverage you prefer and to prevent any possible gap in coverage, we recommend that you enroll in a plan before you become eligible for Medicare. This way your Part D benefits will begin the month of your Medicare eligibility. Also, because drug plans cover different drugs, enrolling yourself into a plan allows you to choose a plan that will cover all or most of the drugs that you are taking.

Again, remember if you have Medicare and full Medi-Cal you have the right to change plans on a monthly basis.

If you’re newly eligible for Medi-Cal

If you are newly eligible for Medi-Cal, you may also experience a gap or delay in being auto-enrolled in your Part D plan and your ‘extra help’ (the low-income subsidy (LIS) program).

During this delay, you can either pay for your drugs out-of-pocket and file for reimbursement from your plan, or ask your pharmacy to bill a “back-up” system called Wellpoint/Point of Sale (POS) for drugs you need immediately. If you encounter problems obtaining drugs, you can contact your local HICAP program.

Your auto-enrollment and extra help/LIS benefits are retroactive to the date you first became eligible for Med-Cal. For example, if you receive Medi-Cal in June 2008 but are determined to have been retroactively eligible for Medi-Cal in December 2007, your plan may have to retroactively reimburse you for all charges for Part D drugs, including both non-formulary and formulary drugs with prior authorization requirements, during this time. Plans may have to pay you retroactively for these costs for a period of up to 7 months. Outside of this 7-month period, plans are only required to reimburse your claims for drugs on their formulary.

↑ back to top

7. What if I have Medicare and Medi-Cal with a Share of Cost?

If you have Medi-Cal with a share of cost (SOC), you may qualify for help in paying for your Medicare prescription drug plan premium. You should apply for this extra help (also called the "low-income subsidy") at your local Social Security Administration (SSA) or Medi-Cal office. For information about the program and how to apply, see our page on Extra help with Part D costs.

After you apply, if you meet your SOC for any one month between January to June, you qualify for the extra help/LIS program for the rest of the calendar year. If you meet your SOC for any one month between July to December, you qualify for the extra help for the rest of the calendar year and the following year. This means you will have most of your prescription drug coverage paid for.

With the extra help if you enroll in a ‘benchmark’ plan, your drug cost-sharing amounts are as follows: no premium, no deductible, and co-payments of $2.25 for generics and $5.60 for brand-name drugs. Note: ‘benchmark’ plans are basic Medicare Part D plans whose premiums are below the average premium in California ($19.80 in 2008). If you enroll in a plan whose premium is above the benchmark, you will pay the difference between the subsidy ($19.80) and the plan’s premium. Again, after meeting your SOC once, you will continue to qualify for the low income subsidy cost-sharing amounts for the rest of that calendar year.

Also, as mentioned, if you meet your SOC again in any month between July and December, you will automatically continue to get the extra help next year. If you don’t meet your share of cost again during this time, you will need to reapply.

↑ back to top

8. What are my Medicare Prescription Drug Plan options?

You have several choices for Medicare Prescription Drug Coverage. Coverage is available in 2 forms — Stand-alone Prescription Drug Plans (PDPs) and drug coverage that is available through a Medicare Advantage Plan (MA-PDs).

Prescription Drug Plans (PDPs):

If you are in original, fee-for-service Medicare, you can enroll in one of the 56 prescription drug plans ("PDPs") available throughout California that contract with Medicare. These PDPs provide drug coverage only.

Medicare Advantage Prescription Drug Plans (MA-PDs):

If you are enrolled, or want to enroll, in a Medicare Advantage plan (these are primarily managed care plans, such as a Medicare HMOs, PPOs, SNPs or PFFS plans), you can join a plan that also offers prescription drug coverage if it is available where you live. Medicare Advantage plans continue to be offered on a county-by-county basis, so availability varies across California. If you are enrolled, or want to enroll in a Medicare Advantage plan with prescription drug benefits, you will get all of your Medicare-covered health care through that plan as well as your prescription drugs.

1. HMO (Health Maintenance Organization)

   Some HMOs provide Part D prescription drug coverage and others do not. If you are in an HMO offering Part D coverage, you can decide whether to receive your Part D drug coverage through the HMO, or buy a stand-alone prescription drug plan (PDP) outside of the HMO. Note: If you are in an HMO that does NOT offer Part D benefits, you can NOT buy a PDP. This means you will have no Part D coverage as long as you are in that plan.

2. PPO (Preferred Provider Organization)

   You can also enroll in a regional PPO (Preferred Provider Organization) plan. There are 2 regional plans offered throughout the state. Both plans include Medicare Prescription Drug Coverage. San Diego County has a local PPO.

3. Medicare Advantage Private Fee-For-Service plans (PFFS)

   Some Medicare Advantage Private Fee-For-Service (PFFS) plans provide Part D prescription drug coverage and others do not. If you choose to enroll in a PFFS plan without drug coverage, you can get drug coverage through a stand-alone prescription drug plan (PDP). PFFS plans are offered in every county in California.

4. Special Needs Plans (SNPs)

   Medicare Special Needs Plans (SNPs) are designed for certain populations. For example, a Medicare SNP may limit its enrollment only to people in certain long-term care facilities (like a nursing home), or people who are eligible for both Medicare and Medi-Cal, or people with certain chronic or disabling conditions. All SNPs must provide Medicare prescription drug coverage.

One plan at a time:

Generally, you can only have Medicare covered prescription drug benefits from one plan at a time. If you currently have a Medicare Advantage Plan or Medicare Prescription Drug Plan and you enroll in a different plan during the annual election period (November 15 – December 31), you will be disenrolled from the plan you have now when your enrollment in the new plan begins as of January 1 of the following year. However, people who have a Private Fee-for-Service plan or who are in a Medicare HMO Cost Plan, may also have a Medicare prescription drug plan (PDP) at the same time to provide benefits that are not included in their HMO or PFFS plan.

↑ back to top

9. What is the cost of Medicare Prescription Drug Coverage?

The prescription drug plans (PDPs) and Medicare Advantage plans (MA-PDs) that provide prescription drug benefits are like any other kind of insurance. The plans charge monthly premiums and most have a yearly deductible, co-payments, and coverage limits. Coverage limits can also include a gap in coverage (referred to as the "doughnut hole") during which you must pay all drug costs before Medicare begins paying again.

Your costs will vary depending on which plan you choose. Your plan must, at a minimum, provide a standard level of coverage as shown below.

Note: if you have a low-income, you may qualify for extra help in paying the costs outlined below.

Standard Part D coverage

In the 2008 calendar year, you will pay the following amounts for covered drugs if you are enrolled in a “standard plan”:

*Only drugs on your plan’s formulary count towards the $4,050 out-of-pocket costs you pay before catastrophic coverage begins.

You will also pay a monthly premium. This varies from plan to plan, ranging from $14.30 to $102.70 per month in California in 2008).

Most Medicare prescription drug plans, however, look different than this. Companies that offer plans can change some of these cost-sharing limits. More expensive plans may have a lower or no deductible, or cover some of your drugs when you reach the donut hole. Plans also have some flexibility in deciding which drugs to cover, and have created a list of covered drugs (also known as a "formulary"). In addition, if you need a drug that your plan does not cover, you may have to pay out-of-pocket for the drug, and that payment will not count toward the coverage limits. You can also switch to a drug that is covered by your plan, or file an appeal to have a non-formulary drug covered, but if the appeal is unsuccessful, you will have to pay out of pocket for it.

↑ back to top

10. Will my drugs be covered?

Medicare Prescription Drug Plans must include at least 2 drugs in each drug category. The plans must also do the following:

• Make sure you have convenient access to retail pharmacies.
• Have a process for you to get drugs that are not on the list of covered drugs ("formulary") when it is medically necessary.
• Provide useful information to you, such as how formularies and medication management programs work, information on saving money with generic drugs, and grievance and appeal processes.

It is important to look for a plan that covers most, if not all, of the prescription drugs you take. As part of a “transition plan,” the drug plan might cover some of the drugs you currently take that are not on the plan's formulary while you work with your doctor to find an alternative prescription drug to take that is covered by the plan. If your doctor believes you need to take your current prescription drug and should not switch to a covered prescription drug, you can do the following:

• Contact the plan and ask for an "exception". You will probably have to provide information from your doctor about why you need the drug.
• If your plan denies the exception, you can appeal.

There are some kinds of drugs that no "standard" Medicare drug plan will cover. These “excluded” drugs include barbiturates (often used for seizure disorders or to relieve anxiety); benzodiazepines (including Xanax and Valium, and other drugs often used for anxiety and insomnia); drugs used for anorexia, weight loss, or weight gain; fertility drugs; drugs used for cosmetic purposes or hair growth; cough and cold medicines; prescription vitamins and mineral products; and over-the-counter drugs. However, some "enhanced" drug plans will cover some of these drugs.

If you are on full Medi-Cal and are concerned about how you will get any excluded drugs, please see our question regarding having Medicare and Full Medi-Cal.

↑ back to top

11. What should I watch for when companies try to sell me a drug plan?

Several rules protect consumers, including the following:

• Representatives from a Medicare drug plan are not allowed to come to your home unless you invite them to come and give you information about their drug plan.
• Representatives from a Medicare drug plan are allowed to call you at home unless your phone number is listed on the National "Do Not Call" Registry.
• Representatives from a Medicare drug plan are not allowed to ask for your Medicare number, Social Security number, or other private information over the telephone if they are calling you. They may only ask you for this information if you have called them.

↑ back to top

12. How do I enroll in a drug plan?

You can enroll in a plan in several ways: on the medicare.gov website, by calling the plan directly, or by calling 1-800-MEDICARE.

Only you or your authorized representative may enroll you in a prescription drug plan. An authorized representative is someone who has the legal right to make health care decisions on your behalf (for example, through a power of attorney).

↑ back to top

13. Where can I get help in deciding if I need a prescription drug plan and in choosing a plan?

Many resources are available to help you make these decisions. See our Prescription Drug Resources section for a full list.

back to Prescription Drugs

Page updated April 23, 2008