Medicare Part D in 2011

Changes in Medicare Part D in 2011

Health care reform marks many changes in Medicare - including Medicare Part D in 2011. As the name implies, The Patient Protection and Affordable Care Act endeavors to make health care more affordable for Medicare recipients. And Medicare Part D prescription drug coverage is no exception.

Two most notable areas of change include shrinking the doughnut hole (or coverage gap) and making it easier to access the low income subsidy.

The Doughnut Hole in 2011

Medicare Part D is available through private insurance companies. That means the coverage for prescription drug expenses varies from plan to plan. Medicare Part D plans generally include member cost-sharing provisions. A deductible is the amount you pay out of your own pocket for prescription drugs even before the insurance plan begins to cover them. Then, after your deductible is satisfied, you still pay a share of the costs in the form of either a flat copayment or a percent coinsurance. These amounts can add up over time, especially for those who must take expensive medications to control a disease or medical condition.

Prescription drug plans also come with certain limits. One limit is the maximum amount that your plan covers in a year. Once your plan has paid out a specified amount for prescription drugs, you pay 100 percent of the costs for your prescription drugs. Then, if you get to a point where you have paid out a stated maximum amount during that year, you reach a need for more coverage. Catastrophic coverage pays most of your prescription drug costs for the remainder of the year. You pay only a small copay or coinsurance during this time.

The doughnut hole (or coverage gap) is the point between the plan's maximum coverage amount, where you begin paying 100% of the costs, and when catastrophic coverage begins after you've paid your out-of-pocket maximum.

It is at this point when you first enter the doughnut hole that the government will issue you a check for $250 to help you pay for your prescription drugs during the gap. But, while generous, if you're at this point, you probably know full well that $250 won't last long.

That's why health care reform laws provide a way to make Medicare prescription drugs in 2011 more affordable during the gap. One way is by securing a 50% discount from the drug manufacturers for brand-name prescription medications. And the government itself provides a 7% discount for generic drugs, which, if available, are generally much cheaper than their brand-name counterparts.

It doesn't remove the need to pay out of pocket for your medications. But it does help to take the sting out of the expense until you reach the catastrophic level of coverage.

Low Income Subsidy for 2011

The Medicare low-income subsidy program is also known as the "Extra Help" program. If your income is below a certain threshold, you can qualify for Extra Help. The thresholds in 2011 are as follows:

• A single person's income must be less than $16,335 and resources (that is, money in checking, savings, etc.) must be less than $12,640
• A married person (who lives with a spouse and has no other dependents) can earn up to $22,065 with resources less than $25,260

The Extra Help program helps you pay for the following prescription drug expenses:

• Your monthly premium
• Deductibles
• Coinsurance and copayments
• Expenses during the coverage gap
• No late enrollment penalty

Health care reform changes to Medicare Part D in 2011 make it easier to qualify for this low-income subsidy by:

• Removing Medicare Advantage rebates and quality bonus payments from the calculations that determine the low-income benchmark
• Allowing Medicare Part D plans to bid slightly above the regional benchmark and still qualify as a low-income subsidy plan at the LIS rate
• Allowing widows and widowers to remain eligible for Extra Help for one year after the death of a spouse before they have to reapply
• Providing information from the Centers for Medicare and Medicaid Services about the differences between low-income subsidy plans in the event you switch from one plan to another

Other changes in Medicare Part D in 2011

There are other changes in Medicare Part D in 2011 that can impact you as well. One important change is to the enrollment period. Annual enrollment for Medicare Part D plans in 2012 will begin on October 15 instead of November 15. The period only runs until December 7 instead of the end of the year, but this change still makes the entire annual enrollment window a week longer than in the past.

Starting in 2011, you will no longer be able to switch to a different Medicare plan from January 1 to March 31. Instead, there is now an Annual Disenrollment period in from January 1 to February 14 in which individuals can disenroll in their Medicare Advantage plan. It is only in that circumstance that you can then enroll in a new Medicare Part D plan.