Prescription drugs are the most expensive items in a senior citizen’s medical needs. Even though Medicare Part D offers coverage for prescription medicines, it is not a hundred percent payment for costly medicines. Several out-of-pocket expenses are part of the Medicare Part D plan. Since Part D does not cover all the prescription drugs, these expenses have to borne by the policy holders. Other Medicare expenses relating to Part D include annual deductibles and drug cost co-payments. Most of the Part D plans have an annual deductible of $250 and a 25% co-payment. This 25% co-payment is applicable until the enrollees have reached $2250 limit in drug expenditure. Up to this limit, the out-of-pocket expenses are $750. But, once the beneficiaries cross the $2250 limit, the enrollees will be paying hundred percent of the drug cost which can be very expensive for people with limited income or resources. This coverage gap that defines the range of drug expenditure is often called the Doughnut hole. Because of this factor, it is observed that a number of senior citizens have not enrolled in the Part D plan. This will eventually lead to a rise in the premiums of the existing policy holders.
However, not all purchases are considered as out-of-pocket expenses. The following instances do not come under the out-of-pocket expenses criteria: purchase of drugs that are not covered by the chosen plan, purchase of prescription drugs during travels from a pharmacy outside the plan area or network, using other medical insurance plans that the individual holds to buy prescription drugs, and purchase of medicines from other countries. In all these cases, the Medicare beneficiaries have to pay the total cost of the medicines from their pockets. Only the low-income subsidy individuals are exempted from the deductible phase and the doughnut hole, either partially or completely.
Insurance providers have different plans for deductibles and co-payments. The $275 deductible and 25% co-payment is the standard drug benefit established by Medicare Prescription Drug, Improvement, and Modernization Act (MMA). The standard benefits can have variations according to the plan you choose. Some insurance providers offer enhanced benefit plans that either waive the deductibles or extend the initial coverage limit or both. However, there are some hidden costs in such benefit plans; the premiums will be higher to compensate the losses for the provider. It would be helpful to compare the plans of different providers before you buy any prescription drug plan so that you can easily calculate what would be the range of drug expenditure and how much you will be spending as out-of-pocket expenses.