Medicare is the leading provider of health insurance for older citizens in the United States. More than 44 million Americans get some or all of their health coverage through Medicare, with that number set to rise above 79 million by 2030. Prescription drug benefits are a major part of that coverage, though the way this benefit is delivered varies by Medicare program. So does Medicare Cover Prescription Drugs? Let’s have a look.
Medicare Cover Prescription Drugs under Original Medicare
Most Americans with Medicare choose to get their benefits through the Original Medicare program, which is administered by the federal government. Original Medicare splits its coverage into three parts, known as Parts A, B, and D. Medicare Part A pays for hospital and other inpatient costs, while Part B assists with outpatient expenses, such as medical office visits. Prescription drugs administered while in the hospital, such as surgical anaesthetics, are generally paid for under Part A, while vaccines and other provider-administered medications usually fall under Part B.
Part D is the main prescription drug benefit under Original Medicare. This element pays for some of the cost of the drugs beneficiaries pick up from the pharmacy and take at home. Part D coverage levels vary by state and by a specific plan, but participants are generally expected to pay a monthly premium for their Part D plan and cover the listed copayment amounts. Out-of-pocket costs go as high as $5,100 per calendar year in 2019.
Medicare Advantage Drug Benefits
Medicare Advantage is an increasingly popular alternative for many Medicare-eligible seniors to receive their benefits. Medicare Advantage plans, which are sometimes known as Part C, are offered by private insurance companies that bill Medicare for much of the cost of covering plan participants. Because of this unique price structure, some Part C beneficiaries’ monthly premiums are as low as $0, while others pay up to a few hundred dollars a month.
Part C plans vary by state, with some states supporting several Medicare Advantage providers in large markets. All Part C plans charge a single monthly premium for the combined benefits of Original Medicare Parts A and B, and many add on extra benefits such as vision care and prescription drug coverage.
Some Part C plans offer minimal drug coverage, with a significant discount to the monthly premium and cost savings for beneficiaries whose medication needs are not great. Other plans provide comprehensive drug coverage for either increased premiums or reduced benefits elsewhere, such as dental care. Part C recipients are not permitted to enroll in either Part D or Medigap supplemental plans, so it is important to shop around for a Medicare Advantage plan that meets all of your prescription drug needs.
Drug Coverage through Medicare Supplemental Plans
People who receive Original Medicare often find that their plans have certain gaps in coverage. Because these spaces (generally the difference between coverage limits and maximum annual out-of-pocket costs) can fall on the beneficiaries’ shoulders, many Medicare participants opt into a gap supplemental plan, or Medigap plan.
Medigap plans are offered by private insurance companies to fill the spaces left by traditional Medicare coverage. They are not, by law, intended for Part C beneficiaries, but for people enrolled in Original Medicare. Though Medigap plans are issued by private insurers in each state, both state and federal law require authorized plans to include minimum coverage levels and to meet other mandates, such as charging acceptable group rates and accepting applicants with preexisting conditions.
Policies offered under Medigap can help pay for some of the prescription drug costs that are not included under traditional Part D policies. Details of this coverage vary by state, as well as by individual provider within each state, so there is no national standard for how much of the cost of prescriptions must be covered. Fortunately, most states have several authorized Medigap providers, and many Medicare plan representatives can offer advice about choosing a supplemental plan that offers acceptable drug benefits.
Medicaid as a Prescription Drug Supplement
Some Medicare participants with limited resources depend on their states’ Medicaid program to supplement their prescription drug benefits. Medicaid is a joint state-federal health insurance program that offers basic medical coverage to people with limited income, children, and sometimes pregnant women or people with disabilities. Each state sets its own rules for coverage eligibility and benefit limits, though most follow federal guidelines for income and asset limits.
Seniors who participate in both Original Medicare and Medicare Advantage may be eligible for supplemental Medicaid coverage. For these dual-eligible program beneficiaries, the price paid for prescription drugs is typically far below their list price. After the Medicare Part D or C plan’s benefits have been applied to pay for a prescription, the supplemental Medicaid plan’s coverage kicks in and pays for most of the rest of the cost. In some cases, a remaining copay or spend-down amount may remain as an uncovered out-of-pocket cost, but these costs are generally low for anyone who qualifies for Medicaid coverage on the basis of income.
It is possible to have multiple levels of prescription drug coverage, such as a Part D participant who both qualifies for Medicaid and buys into a Medigap prescription drug supplement, but this is not common. Medicaid plans generally offer most or all of the same coverage as Medigap plans, which makes this kind of coverage stacking largely unnecessary for most Medicare beneficiaries.
For seniors who participate in Medicare, there is always the possibility of incurring prescription drug costs that are not covered, regardless of how their plans are structured. Medicare beneficiaries with limited resources can get extra help paying for their uncovered drug costs through the Social Security Administration’s Extra Help program.
Extra Help is a needs-based federal prescription drug benefit for Medicare participants whose income falls below the qualifying standard. Under Extra Help, unpaid minimums and out-of-pocket copays are covered as a no-cost supplemental that rides with beneficiaries’ regular Part C or D coverage. Seniors who enroll in Extra Help may be asked to provide proof of income, assets, citizenship, and current enrollment in a qualifying Medicare plan. Once approved for coverage, Extra Help remains available with no monthly premium or other costs to participants.
Medicare does cover many of the costs of prescription drugs for its millions of participants. Not all costs are covered, however, and many beneficiaries choose to supplement their coverage with alternative structures. Make sure you’re getting the prescription drug benefits you need by finding a Medicaid or Medicare Advantage plan that’s right for you. Let TrueCoverage help you out — find a plan here.