More about Medicare Part D

How much of drug costs will someone have to pay?

The rules for how much a plan pays can be complicated, so you may need to compare plans carefully. The figures here are for 2011.

• Deductible: With most plans, the covered individual pays out-of-pocket for the first $310 of his prescription drug costs for the year. A few plans that charge a high monthly premium waive some or all of this deductible.
• Partial coverage: After the deductible is reached, a plan pays 75 percent of costs for drugs covered in the plan's formulary. The individual is responsible for the other 25 percent. His portion comes in the form of a copayment for each prescription; the amount of the copayment may vary depending on the plan's drug tiers. This 75-25 split continues until each individual's total prescription drug costs for the year reach $2,840.
• No coverage (the "doughnut hole"): Once a person's total prescription drug costs for the year reaches $2,840 (combining what the plan pays and what the person pays), the plan pays nothing more for his drugs unless and until he reaches the catastrophic limit. A few high-premium plans pay some percentage of costs while he's in this expensive "doughnut hole." However, under the new federal healthcare reform law, when any Medicare Part D beneficiary reaches the doughnut hole, brand-name drugs will be available at a discount price of 50 percent of retail cost, and the plan will pay 7 percent of the cost of generic drugs.
• Catastrophic coverage: If the total amount a person pays out-of-pocket for prescription drugs during the year reaches $4,550, his plan will again begin coverage at the rate of approximately 95 percent of further costs for covered drugs, with him paying the remaining $2.50 per generic or $6.30 per brand-name prescription, or 5 percent of the prescription cost, whichever is higher.

Can people get help with the cost of a plan?

If their income is low (up to 150 percent of the federal poverty level) and they have few assets (up to roughly $12,000 for an individual, or $25,000 for a couple) other than a home, they might be eligible for a low-income subsidy (LIS) that provides significant help with the costs of a Part D plan. Depending on exactly how much income and how many assets they have, the deductible, coverage gap, and copayments could all be eliminated or reduced. Applying for an LIS is done separately from enrolling in a plan, and it's done with the Social Security Administration, not directly with the plan or with Medicare. Get information on the Social Security Administration website, call toll-free at (800) 772-1213, or make an appointment with any local Social Security office.