The Medicare Drug Program: What You Need to Know

On January 1, 2006, Medicare implemented the new Medicare Prescription Drug Program, Medicare Part D. The initial enrollment period began on 11/15/05 and ended on 5/15/06. Beneficiaries who become eligible for Medicare after 5/15/06 are allowed to enroll in a Part D plan when their enrollment in Medicare A or B becomes effective. Coverage begins on the first of the month following enrollment or on the date their Medicare A or B takes effect. In addition, there is an annual open enrollment held from November 15 to December 31 each year during which beneficiaries can make a change in their Part D coverage. Any change made during this open enrollment will be effective January 1. The program offers special enrollment periods during the year to people who become newly eligible. While this is a voluntary program, people who did not join during the intial open enrollment or when they became newly eligible will face a penalty for late enrollment.

Part D is an insurance program that provides help with prescription costs and protection for catastrophic costs. The standard plan requires members to pay a monthly premium, deductible, co-insurance and direct-pay, out-of-pocket costs during the period of time when there is a gap in coverage or what is often referred to as the “donut hole.” The program establishes a limit, however, on the out-of-pocket costs to enrollees by providing comprehensive coverage when an enrollee’s drug costs hit a certain amount each year.