Prescription Drug Plan Definitions

Information Provided by a Senior Prescription Drug Plan representative

The following are some important terms you’ll want to be familiar with as you investigate Medicare Part D prescription drug plans. If you’d like assistance, MedicareMall will be glad to help you make an informed decision regarding the Medicare prescription drug plan that’s best for you.

Affordable Care Act

In 2010, President Obama signed this act into law. Under the Affordable Care Act, certain brand name drugs come with a 50% discount for Medicare beneficiaries in the donut hole (see below). The ultimate goal of the act is to completely phase out the donut hole within the next 10 to 20 years. Check our blog to get updated information on this health care reform as legislation changes in Washington.

Benefit Stages

There are four phases associated with Medicare Part D prescription drug coverage.

During the deductible stage, you’re responsible for paying any deductible your plan requires you to pay before your drug plan begins making payments for your prescription drugs. Once your deductible is met, you enter the initial coverage stage, which normally requires you to pay co-payments or coinsurance. Next is the donut hole or coverage gap stage, where typically you’ll pay drug costs out of pocket. Once your total out-of-pocket costs (including your yearly deductible, co-payment, and coinsurance amounts) reach $4,700, you enter the catastrophic coverage stage, where you automatically get catastrophic coverage and are required to pay only a small co-payment or coinsurance amount for the rest of the year.

For further information on each benefit stage, see our benefit stages page.

Formulary

Formulary is a list of prescription drugs covered under your particular Medicare Part D plan.

Medicare Part D

Medicare Part D, often referred to simply as prescription drug coverage, was established by the federal government to subsidize prescription drug costs for people on Medicare.

If you have questions about any of this, MedicareMall will be glad to provide any assistance we can. Contact us now and we’ll lead you through the Medicare maze and see that you have the knowledge and confidence you’ll need to make the best decisions about Medicare supplement insurance plans or any other aspect of your health care.