Like other types of insurance, Medicare prescription drug plans cover a portion of the costs, and you pay a portion. In other words, it is a cost-sharing arrangement. People who qualify for financial assistance from the government (known as "Extra Help") pay less. It is always important to keep in mind that plans are likely to increase their premiums and costs each year.
Medicare prescription drug plans are allowed to organize the cost-sharing arrangements in different ways, as long as they do so fairly as required by law. For example, some plans have higher premiums because they offer some coverage through the Coverage Gap, but provide the same dollar value of benefits in the long run.
Please click here for information from our partners at Medicare Interactive who describe the Medicare Part D plan in detail.
Again, all Part D plans are allowed to design their cost-sharing arrangements differently, as long as they pay their portion of the total value.
Because people's prescription drug needs differ, each person will have different out-of-pocket costs at any one point in time. Only people with very high annual prescription drug costs, such as people with MS on a disease modifying medication, can be expected to reach the Coverage Gap and possibly the Catastrophic Coverage limit each year. Some may hit the Coverage Gap in January, and others later in the year or not at all. Those who do hit the Coverage Gap can find it very financially draining, and planning their personal finances in anticipation of it each year should be an important goal.