The Medicare Prescription Drug Program - Part D


Prescription Medicines



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What Is It?

As of January 2006, Medicare began offering coverage for prescription drugs, both generic and brand name, through Medicare prescription drug plans. The plans are offered by insurance companies and other private companies that have been approved by Medicare to provide the plans. Joining a plan may substantially reduce out-of-pocket prescription drug costs. Those with low incomes will receive help with paying premiums and deductibles. However, you will need to choose the best plan for you based on what the company offers and then enroll. There is help available to assist you with making this decision should you decide to enroll in this voluntary program.

The approved prescription drug plans must offer discounts on prescription drugs for all of their Medicare enrollees. At least some of these savings must come from manufacturer rebates. The program sponsors also must publish prices for the prescription drugs their plan will cover, provide access to an extensive retail pharmacy network, operate call centers and have a process to respond to beneficiary concerns.

The plans vary in the prescription drugs covered, how much you have to pay, and the pharmacies you can use. All the plans have to provide a set minimum of coverage. A plan may offer additional coverage at a higher fee.

More information on the savings and cost is described below in the section "How Much Will It Cost?".

Please note that these prescription drug plans, in effect, are insurance plans based on risk. Insurance companies will be the primary providers of the plans. You will be paying an "insurance" premium monthly. It is, basically, an insurance program backed by the federal government that is designed to assist you should you have catastrophic drug expenses.




Who Can Join a Medicare Prescription Drug Plan?

Anyone with Medicare can join a Medicare prescription drug plan. However, joining a plan is voluntary. It doesn't matter how much money you make, what your assets are, or whether or not you are 65 years of age. The only requirement is that you are currently on Medicare or have just become eligible.



Does your family member have Alzheimer's? Anyone receiving Medicare can enroll in a Medicare prescription drug plan, including those with Alzheimer's. The Alzheimer's Association has put together a fact sheet for caregivers of those with Alzheimer's. Please note that, originally, drugs specifically used to treat Alzheimer's Disease were not covered. This is changing. The Alzheimer's Association can provide updated information. This issue is addressed in the above referenced fact sheet.


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Assisted Living Residents

(Adult Care Homes, Family Care Homes, Domiciliary Homes, etc.)

If you are the caregiver of a resident of an assisted living facility, know that the resident must choose and enroll in a plan just like everyone else. They will not be automatically enrolled unless they currently receive both Medicare and Medicaid or fall into other very specific categories (currently on low income assistance). Even then, the plan chosen for them may not be the best one for them. The resident or his/her representative should evaluate the plans and choose the best fit for the resident's circumstances. As a caregiver, you may choose to obtain (with the resident's approval) an "Appointment of Representative" to make this process easier.




Nursing Home Residents

If you are the caregiver of a resident of a long-term care facility (nursing home), the resident is responsible for enrolling in a Medicare prescription drug plan just like everyone else. However, you are allowed to assist them. The facility is supposed to provide staff to help make the choice and select the best plan. Plan to use that resource so that you will know what pharmacy the facility will be using as well as other factors that may influence your choice.

Many residents have already signed over Power of Attorney status to a family member. Another alternative is to obtain an "Appointment of Representative" form from Medicare (form # CMS-1696) which allows a resident (or other person) to appoint a representative to act on his/her behalf on matters related to Social Security (remember, Medicare and Medicaid are part of Social Security).

There are special considerations related to nursing homes. These considerations are especially relevant to those who are "private pay".

  • Some nursing homes have agreements with specific pharmacies to provide needed medications. Will the plan chosen include that pharmacy? What happens if it does not?
  • Some homes may enter into an agreement with a specific Medicare drug plan provider. What happens if you choose a different plan?
  • Some homes require that medications be packaged in a single dose. Do the approved pharmacies for a plan offer this option?
  • See the section on things to consider below.
  • If a resident is on Medicare and Medicaid, he or she is automatically assigned a plan unless the resident enrolls him or herself. However, the automatic enrollment plan may not be the best suited for his or her needs and for working with the facility in which he/she resides. The resident still has the right to enroll in a plan of his or her choosing. And, a resident may change from a plan in which he or she has been automatically enrolled. If automatic enrollment happens, check the plan to make sure it is the best option.
  • The facility should provide a staff person to assist with enrollment. Understand that the facility will want residents to enroll in plans that best suit the facility. This may be best for the resident as well. But, it may not. Check any preferred plan against the others for what is most suitable for the resident's needs.
  • Note that if a long-term care resident is on Medicare and Medicaid, co-payments are exempt.


Nursing homes are required to assist residents in enrolling in a Part D plan and in filing exceptions and appeals. Facilities must inform both patients and families about the resident's rights and responsibilities. Facilities may choose the pharmacy, but they may not steer residents to particular plans or enroll them in plans (at this time, advocates are trying to get an exception that would allow the facility to enroll residents who have no one else to assist them).

But, what happens if the patient enrolls in a plan that does not include the pharmacy that the facility uses? According to Medicare, the facility must use the pharmacy in the resident's plan. The facility may encourage a resident to change plans to one that includes their chosen pharmacy but they cannot make a resident change plans.

If a resident finds that his or her drugs are not covered by their plan, there are options.

  • the resident may change plans at any time effective on the first day of the month
  • the resident may ask his or her doctor about using a different covered medication
  • an exception may be filed with the plan to show that the non-covered drug is medically necessary and to try to get the plan to cover it for this particular patient; Medicare expects facility staff to be able to assist a resident with the filing of an exception; please note that while waiting for a determination on a filed exception, the facility must provide any prescribed drug per the care plan; contact your state aging agency for more assistance with filing an exception
  • residents on Medicaid can use their state's incurred medical expense deduction to purchase non-covered drugs
  • your state Pharmacy Assistance Program may cover the drug(s)
  • ultimately, the facility must provide any drug that is included in the resident's care plan, regardless of the resident's ability to pay

Please note that even if there is no source of payment the facility must provide any drug that is included in the resident’s care plan. A facility must provide the services that a resident needs, including drugs, regardless of the non-availability of funding.

For residents in long-term care facilities, there may be a higher likelihood that some needed medications will be excluded from the prescription drug program. Be sure to check before enrollment.

States may cover some or all barbiturates and benzodiazipenes under their Medicaid programs and may cover other excluded drugs. Drugs included or excluded may change from year to year.

As previously indicated, non-Part D covered drugs may be an allowable incurred medical expense deduction if the resident does not have another source of payment for the drug. Residents who are not dually eligible for Medicaid may have an additional source of funding for these excluded drugs, such as State Pharmaceutical Assistance Programs, or they will have to pay privately for excluded drugs (which may mean the facility will be responsible for providing the drug).

How is payment made for over-the-counter drugs? While Part D plans will not pay for over-the-counter drugs, these drugs are included in the Medicare Part A daily payment and are paid for by Medicaid for Medicaid beneficiaries, either as part of the daily rate or as a separate payment. For private-pay residents, coverage of over-the-counter drugs depends on state law and the terms of admissions contracts.





If you are a Veteran or retired federal employee, your coverage will probably be better through the Veteran's Administration or TRICARE than the coverage that you would receive through the Medicare prescription drug program.

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State Offices Nationwide
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Tricare & Medicare Part D
Retired Federal Employees
General Information


Medicare has more online information for you.

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Why Should I Join?

The new plans can amount to substantial savings over the out-of-pocket expenses for prescription drugs. For most people, joining during the initial enrollment period (when you first qualify for Medicare) means paying a lower monthly premium than if you wait to join later. Therefore, it might be worthwhile to join during the initial enrollment even if you do not currently have high prescription drug costs. Think of it as buying an "insurance policy" for prescription drugs. You may not need the coverage at present but "purchasing" the policy now will give you lower "premiums". Your prescription drug needs may increase over time.

All the plans will have to provide a minimum standard level of coverage which will be set by Medicare.

If you are receiving your prescription drugs free or at a very low cost directly through the drug manufacturer, be aware that there is no guarantee that those drugs will continue to be available through the manufacturer's subsidized program. Many manufacturers have chosen to discontinue these programs for everyone except those not covered by Medicare since the government will be paying for the cost of the drugs for individuals and the drug companies are required to offer some subsidies toward the program in the form of rebates. However, if a needed drug is not covered by Medicare, it makes sense to contact the manufacturer to see if they might agree to subsidize your purchase, especially if your income is low.




When Can I Join?

If you are new to Medicare, you can join from three months before you turn 65 to three months after you turn 65. Not joining per Medicare rules will result in a monetary penalty that will continue from year to year. Consult with a Medicare representative or a Senior Health Insurance Information Program Representative for personalized assistance in making the best choices.


The effective date for beneficiaries who enroll in a plan is the first day of the month following the month you enroll.

Once you join, you will only be able to change your provider once a year so you will need to choose wisely. The time frame for changing plans will be from November 15 - until December 31 each year. However, there are a few exceptions such as if you enter a long-term care facility, move out of state, and a very few others.




How Much Will It Cost?

Like other insurance, people who join a Medicare prescription drug plan will pay:

  • a monthly premium
  • a yearly deductible, and
  • a co-payment
Cost of Healthcare

The plan is expected to provide significant savings. (nearly 50% on average, much greater for low-income seniors)

For the basic benefit, a person would pay a monthly premium of about $37 and an annual deductible of $250.

There will be a co-payment for the cost of medications (see chart below). (amounts subject to change)


There will be no Medicare coverage for prescription drug costs between $2,250 and $5,100. Medicare beneficiaries will pay 100% of the drug costs between $2,250 and $5,100. You will have a 25% co-pay up to $2,250 after you have met your $250 deductible. You will pay a 5% co-pay after your prescription drug costs reach $5,100 and your out-of-pocket expense reaches $3,600. (see chart below). Note: The out-of-pocket amount does not include the monthly premiums.

This chart example shows what out-of-pocket expenses on a basic plan may be. Plans can be "better" than what this chart shows but not "worse" than this Medicare standard.

Actual Drug Costs Medicare Pays Beneficiary Pays Cumulative Total
$ 0-250 $ 0 $ 250 (deductible) $ 250
$ 250-2250 $ 1500 (75%) $ 500 (25%) $ 750 ($250+$500)
$ 2250-5100 $ 0 $ 2850 (100%) $ 3600 ($750+$2,850)
$ 5101+ $ about 95% $ about 5% $ varies


Note: The first $250 is a deductible and cannot be counted as part of the out-of-pocket expense. The difference between $5100 and $2250 ($2850) is added to $750 for a total out-of-pocket expense of $3600.

Costs will vary depending on which plan is chosen. Some plans may offer more coverage and additional covered drugs at a higher premium. These plans will be offered by insurance companies and other private companies approved by Medicare. You will need to select the best plan for your needs and ability to pay. More information and contact information for help is listed below.

Medicare Drug Benefit Calculator
An online drug benefit calculator is available that allows users to enter their prescription drug costs to determine what they will pay.


Payment of the plan premiums can be arranged for direct payment with the company offering the prescription drug plan or you can arrange to have the amount deducted from your Social Security check each month.




Who Provides These Plans In My Area?

Medicare decides which companies will be able to offer the new prescription drug plans. As the consumer, you then get to choose which company offers the best deal to suit your specific needs. The links below identify the chosen companies with identification of the monthly premium for each and the amount of the deductible applied to prescription drug purchases with the discount plan.


The plan providers for this coverage are also listed in the "Medicare & You " booklet which is updated yearly. There is information on how to choose a plan. Medicare has online help available on their website and you may call 1-800-MEDICARE (1-800-633-4227) or 1-877-486-2048 for TTY users.




How Do I Compare the Plans?

To help you make your decision, here are a few suggestions.

  • Link to a list of companies that will serve your area (see above).
  • Contact them directly or go to their identified website. Do understand, however, that if you do contact them directly they will try to sell you on their plan. They are for-profit insurance companies (typically) competing with all the other companies offering the prescription drug plans.
  • Compare the plans.
  • Decide which plan is right for your needs.
  • Use the Tips section below in addition to the chart.
  • Or, use Medicare's Formulary Finder. You will enter your zip code, the drugs you use (you may indicate dosage), and the finder will locate plans in your area that cover what you need.
  • Be sure to double check that all your needed prescription drugs are covered by the plan you choose, at a rate you understand, before you sign up. Do this even if you use Medicare's Formulary Finder. There may be exceptions that the Finder didn't account for.

Please note: your Senior Health Insurance Information Program can assist you with this process. Even after you compare plans, it might be worthwhile to take the information to a trained counselor to make sure nothing has been overlooked and that any caveats with particular types of coverage have been taken into consideration.




What If I Can't Afford These Payments?

There is "Extra Help" for those with limited income and resources to help pay for the premiums, annual deductible, and co-payments related to the Medicare Prescription Drug Program - an average of $2,100 in "Extra Help".

Basically, if a person:

he/she is automatically enrolled for the "Extra Help" and does not have to apply. If a person does not fall into one of these categories but still has a limited income and resources, he or she may still qualify for the "Extra Help".

Those who qualify will still need to apply for a basic Medicare prescription drug plan of their choosing. Joining one of the plans, even if you don't qualify for the "Extra Help", may pay for about half of your prescription drug costs.


The Social Security Administration is helping people to enroll for this "Extra Help". The application can be done on the Internet or you can call 1-800-772-1213 for a paper application or to make an appointment. If you are deaf or hard of hearing, call 1-800-325-0778. Representatives are available Monday through Friday from 7 a.m. to 7 p.m. Tell the representative that you want to apply for "Extra Help with Medicare Prescription Drug Costs".




What Are Some Things I Need To Know?

One thing to remember is that the Prescription Drug Benefit which started in January of 2006 is part of a more comprehensive overhaul of Medicare that will offer some additional benefits such as preventative care. Your local Senior Health Insurance Information Program (SHIIP) volunteers can help you understand any additional benefits for which you may qualify.

The trained SHIIP volunteers can also help you compare the different plans to see which one would offer you the most savings. Their assistance would be especially useful if you have:


There are caveats specific to each that you need to be aware of before signing up for prescription drug coverage. Given the complexity of all the programs, and given that once you make a decision you are locked in for a year, and given that the prescription drug plans can save you money so it may be best to enroll in one, please consider getting assistance from a trained SHIIP representative or from Medicare before making your choice. If you think you qualify for the "Extra Help", the SHIIP volunteers can help you apply. You will need to have documentation of your resources and assets. You will also need to apply separately for one of the Medicare prescription drug plans.

Be sure that, when you do apply, the agency that offers the plan is Medicare approved. You may receive solicitations from other plan providers that are not on the approved list which Medicare provides ("Medicare & You" - updated yearly).

Approved providers are not allowed to solicit by going "door-to-door" or by sending unsolicited e-mails. However, if a plan enters into a relationship with a partner such as a pharmacy, the partner can promote and market the plan.

Also, never give out your personal information, especially your Social Security number, to anyone contacting you directly. You need to be sure the agency you are dealing with is legitimate. The plan sponsors are listed by Medicare in the booklet "Medicare & You". You decide which one you want to use; you contact them. Medicare sponsored plans are not allowed to conduct direct unsolicited contact nor will they ask for your Social Security or Medicare numbers or your credit card or bank account numbers. If you are contacted directly, please get the name of the company and their phone number and report them to your SHIIP agency or Attorney General's office.

As you evaluate the plans, there are some things for you to consider:

  • Are the plan pharmacies convenient for you to use?
  • Does the plan cover the drugs you use?
  • How much will your co-payments be?
  • How frequently are rates likely to rise?
  • Are you allowed to change plans? If so, how often?
  • Is the plan allowed to change covered drugs and prices?
  • Are you able to take generic drugs? If not, will that be a problem?
  • Is the needed medication limited to a certain quantity within a certain timeframe?
  • Does the plan have to approve the drug before you can purchase it? What happens if they do not approve what your doctor has prescribed?
  • Some plans only cover certain dosages of medications. Would you be able to use the drug if it wasn't offered in the dose prescribed by your physician? (Tip: when comparing plans, use the specific dose for each medication. Also, talk to your doctor if this is an issue. The doctor could change your prescription, or your medication could be one that could safely be cut in half (please note that many medications lose their effectiveness when cut and could pose a danger to the patient).
  • If a person lives in an assisted living facility, unit dosing of medications may be required of the pharmacy. Do the allowed pharmacies with the plan chosen offer this service?
  • Drugs will be classified in "tiers". Different drugs that you take may fall into different tiers with different costs or co-pays.
  • Is there any "exceptions" procedure should most of your drugs be covered under the plan but not all? If so, what steps must be taken? What if your current drugs are covered but you later need one that is not covered? Again, find out the procedure for an "exception" or appeal, if available. Note that, in all probability, there will be no guarantee of coverage.
  • Does the plan require "step therapy", a process where the doctor must prescribe a "preferred" drug for a condition before being allowed to use another drug? This would apply even if the patient had been taking a particular drug for years with good results.
  • What happens if you fall behind in the premium payments? Tip: If this is likely to happen, look into the "Extra Help". If budgeting may be the issue, would having the premium deducted from your Social Security check be a good solution?
  • If the drug you need isn't on the plan you choose and you are not able to get the plan to pay for it anyway (through an appeals process), your out-of-payment costs for the drug will not be allowed to count toward your cost sharing out-of-pocket amount. This is important since once your out-of-pocket costs reach $3600, Medicare pays most of your plan drug costs.
  • Do you need prescription drugs typically prescribed for mental health? Many of these drugs are not covered. Be sure to check if you need drugs for eating disorders, or anti-anxiety medications. Talk to your doctor and SHIIP representative for assistance in obtaining these needed medications.
  • Do you use an extended release medication? If so, you will not get an automatic refill for your prescription. How will that work?
  • Do you have established residences in more than one state? If so, consider choosing one of the plans offering national coverage.

Want more information on some of these tips?


These are just some of the things you need to consider to make an informed choice. Use the help available through SHIIP, Medicare, Social Security, and your local aging services providers to help guide you if this seems overwhelming (see below for contact information).




When Can I Change Plans?

Once you join, you will only be able to change your provider once a year so you will need to choose wisely. The time frame for changing plans will be from November 15 - until December 31 each year. However, there are a few exceptions such as if you enter a long-term care facility, move out of state, and a very few others.




Where Can I Go For Help?

Various agencies have been trained on how to help you make your decision on whether to enroll and which plan to choose. They are also trained to help you apply for the "Extra Help" if you think you qualify. The best place to start is your Senior Health Insurance Information Program.


Another place to contact for help is your local Area Agency on Aging or aging services provider.


BenefitsCheckUpRx is an online service of the National Council on Aging to assist individuals with understanding what prescription drug benefits may be available specifically for them.


BenefitsCheckUp helps you learn about and sign up for public and private programs that can save you money on your health care and prescription drugs. This includes the the Medicare Prescription Drug Coverage, State Pharmacy Assistance Programs, Company Patient Assistance Programs and other federal and state programs.

The United States Department of Health and Human Services and the Administration on Aging sponsor this service. It is maintained by the National Council on Aging.

The National Council on Aging also offers My Medicare Matters - a website designed to help you understand your Medicare Prescription Drug Benefits. Logo


Medicare has both online and phone assistance for general enrollment in a Medicare sponsored Prescription Drug Plan. The "Medicare & You" booklet lists important information to help you choose. Medicare has online help available on their website and you may call 1-800-MEDICARE (1-800-633-4227) or 1-877-486-2048 for TTY users.

Medicare now has a new online resource called My Medicare. As a registered user of, you will be able to access your personal information regarding Medicare benefits and services. Registered beneficiaries will be allowed to view entitlement, enrollment, deductible, and address of record information. Additionally, it provides beneficiaries with preventive service information and the option for web chat assistance for any technical questions.



The Social Security Administration is helping people enroll for "Extra Help". The application can be done on the Internet or you can call 1-800-772-1213 for a paper application or to make an appointment. If you are deaf or hard of hearing, call 1-800-325-0778. Representatives are available Monday through Friday from 7 a.m. to 7 p.m. Tell the representative that you want to apply for "Help with Medicare Prescription Drug Costs".




What Do I Do If I Have a Problem?

If you experience problems obtaining your needed prescription drugs under Medicare Part D, there are avenues for help. First, talk to your pharmacist. The problem may be with the pharmacist's ability to get required confirmation from Medicare about your eligibility.

Next, look at the plan you selected. Are you sure the drugs you need are included in what they offer? If not, consider changing plans. Or, talk to your doctor. Another drug or a generic equivalent may be an appropriate remedy. Perhaps a different dosage would make the difference.

Finally, if neither of the above remedies work, you do have the right to appeal the decision of the plan to not provide you with coverage. The Center for Medicare Advocacy offers information on how to do this. In some instances, your doctor will be the one to file the appeal. Medicare offers a manual on grievances, determinations and appeals.


Some states understand that working through an appeals process may be overwhelming for a beneficiary. And, in some cases, the rejection of an appeal may be challenged. They are working to provide assistance through state Seniors Health Insurance Information Programs (SHIIP) and/or through pro-bono or low cost legal assistance. Contact either your state SHIIP program or your state aging agency to find out what assistance is available for you.




Additional Information on
How to Pay for Prescription Drugs

There are a variety of ways to obtain assistance with the high costs of prescription drugs. These used in conjunction with the new Medicare prescription drug program may substantially reduce your out-of-pocket costs.




Protecting Your Personal Information

Unfortunately, there are individuals who will try to take advantage of any situation. Enrolling for the Medicare prescription drug coverage is no exception. However, if you follow a few simple rules, you can protect yourself in both this situation and in others.

Identity theft is a serious and growing concern but you can take precautions that will minimize your exposure. Personal information in the wrong hands can allow a person to have purchases made on credit cards without authorization, money withdrawn from bank accounts, and could expose a victim to other illegal actions. Take action and learn how to protect your personal information. The Centers for Medicare and Medicaid Services have put together a fact sheet on protecting your personal information.


The best advice and the first "rule" is to never give out your personal information, especially your social security number, to anyone contacting you directly. You need to be sure the agency you are dealing with is legitimate. The plan sponsors are listed by Medicare in the booklet "Medicare & You" that is sent to Medicare beneficiaries every year. You decide which one you want to use; you contact them.

Your state's Attorney General office will most likely have online information related to current local scams and alerts in your area.


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Update Part D Information

Each year, the Centers for Medicare and Medicaid services updates information on the Prescription Drug Plan - Part D.



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