Medicare: Understanding The “Coverage Gap”
Article about: Drug Prescription Plans, medicare, Medicare and the Coverage Gap, Medicare basics
As a licensed insurance agent, I spend a great deal of time counseling our seniors on the benefits related to Medicare. Medicare can be a very difficult subject for our seniors, since it is complex and confusing.
One of the most difficult parts of the Medicare program for seniors to understand, is the “coverage gap” in their drug prescription plan. This is the point where the Medicare member is responsible for paying 100% of their drug prescription costs. It is also the most traumatic part of the program because so many seniors are on a fixed income and can hardly afford to pay the entire cost of their prescriptions. Before you sign up for a drug prescription plan, be sure to ask your agent questions on anything you don’t fully understand. This is important and can save the member money in the long run.
Basically, when a Medicare member enrolls in a particular drug prescription plan, there are rules to follow that can help them save money. When registering for a drug plan be sure to know if there is a deductible associated with your plan. Some prescription drug plans have deductibles that have to be met first, before the company is responsible for its portion of the co-payments. Usually, if a plan has a deductible the monthly payments are lower. If you purchase a plan without a deductible, you will pay a higher monthly premium for the plan.
The drug plans without deductibles have distinct advantages from those with deductibles. If you have a plan without deductibles, you’re co-payments start immediately with your first prescription. ( A co-payment is the amount you’re drug company pays as part of its cost sharing) On the contrary, if you have a plan with a deductible, you have to pay 100% of the drug costs until you reach the deductible. Once you have satisfied your deductible the co-payments will begin.
Under the rules for 2009, when you have spent a total of $2,700, (this is the total of what you have paid toward your prescriptions and what the plan has paid in co-payments) you will then enter the “coverage gap”.
Once you’re drug costs exceed the $2,700, you are responsible for paying 100% of you’re drug costs until you’ve spent $4,350 on covered drugs. The $4,350 is a total of what you’re out of pocket costs were before you reached $2,700 (excluding your co-pays) and the corresponding amount you spend in the coverage gap that will total $4,350.
Once you have reached a total of $4,350 you have reached the “catastrophic coverage” level. At this point you will pay approximately $2.40 for generic drugs and $6.00 for all other drugs or 5% co-insurance for the remainder of the year. The following year the cycle starts again based on the updated Medicare prices.
When you are looking for a drug plan be sure to choose carefully. Some plans do offer coverage for you’re generic drugs through the “coverage gap,” and this can definitely save you money. This simply means that the company will offer co-pays for just generic drugs through the coverage gap, resulting in a savings to you, because you will not be responsible for paying 100% for you’re generic prescriptions when you’re in the “coverage gap.”
Also as a reminder, if you ever need additional information regarding Medicare, you can go to the Medicare site at www.medicare.gov for help.
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