Medicare is the federally funded medical insurance program for Americans over age 65. It consists of Part A, which covers hospitalization charges; Part B, which covers physician and lab costs; Part C, which allows for access to Medicare benefits through managed-care organizations, and Part D, which covers prescription drugs. Part D coverage is optional, requires a monthly premium to enroll and is administered by private medical insurance companies rather than directly by the federal government.
History
Medicare came about through the Social Security Act of 1965, which authorized both Medicare for Americans over 65 and Medicaid, which provides basic health care services for the poor, indigent and handicapped. First conceived as a basic hospitalization plan under President Lyndon Johnson's "Great Society" program, Medicaid has expanded in scope over the years. Congress added Medicare Part D in 2003, under President George W. Bush's signature, and first began paying benefits in 2006. Subsidies are available for people of low income.
Eligibility
To qualify for benefits under Medicare Part D, you must enroll in Medicaid Part A or Part B. Enrollment is not automatic -- you must specifically elect to enroll in Medicare Part D and do so during the open enrollment period of November 15 through December 31 of 2010. However, the enrollment period will change in 2011 to October 1 to December 7. Failure to enroll during the enrollment period will result in a late enrollment penalty of 1 percent of the average national premium times the number of years you were eligible for but not enrolled in Part D.
Types of Plans
Medicare beneficiaries can select either a stand-alone prescription drug plan (PDP) or choose to integrate their prescription drug benefits with a managed-care plan under Medicare Part C -- Medicare Advantage. Part D coverage is not standardized. Instead, private companies administer Part D benefits according to their own formularies. Plans vary considerably by state and by company.
Coverage
Medicare Part D covers drugs that have been approved by the Food and Drug Administration (FDA). However, it does not cover any drugs prescribed for "off-label" purposes, meaning for conditions for which the FDA did not approve the drug. Generally, Part D also does not cover weight control drugs except where medically necessary, fertility drugs, drugs used to enhance sexual performance, cough and cold relief drugs, barbiturates and benzodiazapines.
Pricing
As of 2010, Medicare Part D requires a deductible of $310 a year. After that, Part D picks up 75 percent of prescription drug costs up to $2,830. The beneficiary then must pay out of pocket until total drug expenses reach $4,550, at which point Medicare Part D picks up as much as 95 percent of prescription drug costs.
You must pay a monthly premium to enroll in a Medicare Part D plan. Again, plans vary, but the average premium for PDPs in 2009 was $35.09, according to data from the Henry J. Kaiser Family Foundation.
Finding a Plan
The Center for Medicare and Medicaid Services has established an online tool to help you find and select a Medicare Part C or D plan provider. Access the link in the Resources section on this page. Be patient: The page may take awhile to load.
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