12.6.4 Medicare Part D - Prescription Drug Plan
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) created Medicare Part D as an optional outpatient prescription drug benefit for individuals who are entitled to or are enrolled in benefits under Medicare Part A, Part B or both. The Medicare Prescription Drug Benefit Program (PDP) went into effect on January 1, 2006.
In Medicare Part C, we brought your attention to the six-month initial enrollment period that commenced on November 15, 2005 for both Part C and Part D. You should be aware that if a Medicare beneficiary decided not to enroll during this initial enrollment period and decides to enroll later, the beneficiary will pay a 1% penalty for each month of delayed enrollment, unless that person has comparable coverage from another source, such as a private or group plan.
Under the standard benefit, Medicare beneficiaries pay a monthly premium and an annual deductible. Medicare pays 75% of prescription drug costs, but coverage stops completely at a certain amount. If a beneficiary's prescription drug costs exceed a higher level, however, then catastrophic coverage begins and beneficiaries pay copayments of $2.50 for generic drugs and $6.30 for brand name drugs or 5% of total costs, whichever is higher. Premiums and deductibles for Medicare Part D increase annually.
*In 2011, the monthly premium was set at $30 and the annual deductible at $310. Once the annual deductible was satisfied, beneficiaries would be responsible for 25% of the first $2,830 of prescription drug costs and Medicare would pay the other 75%, and coverage then stopped completely. However, if a beneficiary's total drug costs were more than $6,440 after the beneficiary had spent another $4,550, then coverage started again and beneficiaries paid copayments of $2.50 for generic drugs and $6.30 for brand name drugs or 5% of total costs, whichever was higher.
On December 27, 2005, Tom Gallagher, then DFS Chief Financial Officer, issued an informational bulletin to all companies and insurance agents marketing Medicare Part D and Medicare Advantage plans urging review and compliance with the CMS Medicare Marketing Guidelines. Among other things, these guidelines prohibit soliciting Medicare beneficiaries door-to-door before receiving an invitation from the beneficiary to provide assistance in the beneficiary's residence. The guidelines also require Medicare Part D solicitors to comply with the National Do-Not-Call Registry, honor "do not call again" requests, and abide by federal and state calling hours.
