by Don Handshy

Created on: January 06, 2007   Last Updated: April 18, 2007

Medicare Part D is an often confusing (and confused) subject of discussion, and one that is extremely important in the lives of our elderly in the United States of America. Too often we hear the stories of a grandparent who was tricked into signing up for something they didn't understand, or bullied into making a change that costs them more money. Day after day, morally depraved individuals take aim at our beloved elders in an attempt to scam them out of their hard-earned money. So I sit here, after having a similar situation happen to my own grandmother, in an effort to make this topic a little more understandable!

THE STRUCTURE OF MEDICARE PART D
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The Part D prescription coverage plan works with a 4-step structure, that is shared among every single company that offers Part D coverage.

STEP 1 -> STEP 2 -> STEP 3 -> STEP 4
DEDUCTIBLE INITIAL COVERAGE COVERAGE GAP CATASTROPHIC

Step 1 - Deductible

This is the first step in Part D plans. Not every plan has a deductible, but it's important to know that some plans might. The limit on how high that deductible can be is $265. That's not to say that every plan with a deductible will be that high, but that it will be NO HIGHER. This deductible is the amount of money you are responsible for paying out of pocket BEFORE the plan starts sharing costs. With a deductible, this usually means the monthly premium you pay for the plan will be lower than plans without a deductible.

Step 2 - Initial Coverage

This is the meat and potatoes of Part D coverage. This is the period of time where you are responsible for paying your CO-PAYS and COINSURANCE on the medications you pick up from the pharmacy. The plan covers the remaining price of any prescription you buy during this time frame.

Now, this is where the confusion of Part D plans starts to form. Part D plans will have you in this Initial Coverage period until your TOTAL DRUG COSTS reach $2400 (for 2007). This amount will include your DEDUCTIBLE (if you have one), your CO-PAYS and COINSURANCE, and AMOUNT COVERED BY THE PLAN.

What this amounts to is essentially the WHOLE COST OF THE PRESCRIPTION. Not just your copays and coinsurance, not just what the plan has paid during Initial Coverage, but the ENTIRE COST OF THE PRESCRIPTION.

Once the entire cost of your medications for the year has reached $2400 (for 2007), you then move on to Step 3.

Step 3 - Coverage Gap (Donut Hole)

This is where things get even more confusing. During the Coverage Gap (commonly known as the Donut Hole), you are responsible

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